Correlation Between Fortune Brands and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Wheaton Precious at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fortune Brands and Wheaton Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Brands Home and Wheaton Precious Metals, you can compare the effects of market volatilities on Fortune Brands and Wheaton Precious and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fortune Brands with a short position of Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Wheaton Precious.
Diversification Opportunities for Fortune Brands and Wheaton Precious
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fortune and Wheaton is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals and Fortune Brands is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fortune Brands Home are associated (or correlated) with Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Fortune Brands i.e., Fortune Brands and Wheaton Precious go up and down completely randomly.
Pair Corralation between Fortune Brands and Wheaton Precious
Assuming the 90 days trading horizon Fortune Brands Home is expected to under-perform the Wheaton Precious. In addition to that, Fortune Brands is 1.09 times more volatile than Wheaton Precious Metals. It trades about -0.12 of its total potential returns per unit of risk. Wheaton Precious Metals is currently generating about -0.09 per unit of volatility. If you would invest 512,359 in Wheaton Precious Metals on September 2, 2024 and sell it today you would lose (21,859) from holding Wheaton Precious Metals or give up 4.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fortune Brands Home vs. Wheaton Precious Metals
Performance |
| Timeline |
| Fortune Brands Home |
| Wheaton Precious Metals |
Fortune Brands and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Wheaton Precious
The main advantage of trading using opposite Fortune Brands and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Wheaton Precious can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wheaton Precious will offset losses from the drop in Wheaton Precious' long position.| Fortune Brands vs. Hilton Food Group | Fortune Brands vs. Central Asia Metals | Fortune Brands vs. Gaztransport et Technigaz | Fortune Brands vs. Golden Metal Resources |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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