Correlation Between Wheaton Precious and AES Corp
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and AES Corp 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 Wheaton Precious and AES Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheaton Precious Metals and AES Corp, you can compare the effects of market volatilities on Wheaton Precious and AES Corp 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 Wheaton Precious with a short position of AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and AES Corp.
Diversification Opportunities for Wheaton Precious and AES Corp
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wheaton and AES is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and AES Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp and Wheaton Precious 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 Wheaton Precious Metals are associated (or correlated) with AES Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES Corp has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and AES Corp go up and down completely randomly.
Pair Corralation between Wheaton Precious and AES Corp
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.73 times more return on investment than AES Corp. However, Wheaton Precious Metals is 1.36 times less risky than AES Corp. It trades about -0.02 of its potential returns per unit of risk. AES Corp is currently generating about -0.23 per unit of risk. If you would invest 499,401 in Wheaton Precious Metals on September 5, 2024 and sell it today you would lose (5,401) from holding Wheaton Precious Metals or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Wheaton Precious Metals vs. AES Corp
Performance |
| Timeline |
| Wheaton Precious Metals |
| AES Corp |
Wheaton Precious and AES Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and AES Corp
The main advantage of trading using opposite Wheaton Precious and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, AES Corp 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 AES Corp will offset losses from the drop in AES Corp's long position.| Wheaton Precious vs. Givaudan SA | Wheaton Precious vs. Antofagasta PLC | Wheaton Precious vs. Atalaya Mining | Wheaton Precious vs. Ferrexpo PLC |
| AES Corp vs. Blackrock World Mining | AES Corp vs. JLEN Environmental Assets | AES Corp vs. Greenroc Mining PLC | AES Corp vs. Ironveld Plc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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