Correlation Between Axfood AB and Wheaton Precious

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Can any of the company-specific risk be diversified away by investing in both Axfood AB 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 Axfood AB and Wheaton Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Wheaton Precious Metals, you can compare the effects of market volatilities on Axfood AB 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 Axfood AB with a short position of Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Wheaton Precious.

Diversification Opportunities for Axfood AB and Wheaton Precious

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Axfood and Wheaton is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB 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 Axfood AB 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 Axfood AB 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 Axfood AB i.e., Axfood AB and Wheaton Precious go up and down completely randomly.

Pair Corralation between Axfood AB and Wheaton Precious

Assuming the 90 days trading horizon Axfood AB is expected to generate 2.19 times less return on investment than Wheaton Precious. But when comparing it to its historical volatility, Axfood AB is 1.47 times less risky than Wheaton Precious. It trades about 0.15 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  470,000  in Wheaton Precious Metals on November 2, 2024 and sell it today you would earn a total of  33,500  from holding Wheaton Precious Metals or generate 7.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Axfood AB  vs.  Wheaton Precious Metals

 Performance 
       Timeline  
Axfood AB 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Axfood AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Axfood AB is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Wheaton Precious Metals 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Wheaton Precious is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Axfood AB and Wheaton Precious Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Axfood AB and Wheaton Precious

The main advantage of trading using opposite Axfood AB and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB 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.
The idea behind Axfood AB and Wheaton Precious Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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