Correlation Between STM Group and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both STM Group 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 STM Group and Wheaton Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STM Group Plc and Wheaton Precious Metals, you can compare the effects of market volatilities on STM Group 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 STM Group with a short position of Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of STM Group and Wheaton Precious.
Diversification Opportunities for STM Group and Wheaton Precious
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between STM and Wheaton is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding STM Group Plc 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 STM Group 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 STM Group Plc 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 STM Group i.e., STM Group and Wheaton Precious go up and down completely randomly.
Pair Corralation between STM Group and Wheaton Precious
Assuming the 90 days trading horizon STM Group is expected to generate 2.15 times less return on investment than Wheaton Precious. But when comparing it to its historical volatility, STM Group Plc is 2.85 times less risky than Wheaton Precious. It trades about 0.05 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 407,746 in Wheaton Precious Metals on August 29, 2024 and sell it today you would earn a total of 79,754 from holding Wheaton Precious Metals or generate 19.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 92.8% |
| Values | Daily Returns |
STM Group Plc vs. Wheaton Precious Metals
Performance |
| Timeline |
| STM Group Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Wheaton Precious Metals |
STM Group and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STM Group and Wheaton Precious
The main advantage of trading using opposite STM Group and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STM Group 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.| STM Group vs. Spotify Technology SA | STM Group vs. Check Point Software | STM Group vs. Capital Drilling | STM Group vs. Batm Advanced Communications |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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