Correlation Between Wheaton Precious and Darden Restaurants
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Darden Restaurants 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 Darden Restaurants 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 Darden Restaurants, you can compare the effects of market volatilities on Wheaton Precious and Darden Restaurants 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 Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Darden Restaurants.
Diversification Opportunities for Wheaton Precious and Darden Restaurants
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wheaton and Darden is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants 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 Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Darden Restaurants go up and down completely randomly.
Pair Corralation between Wheaton Precious and Darden Restaurants
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 1.59 times more return on investment than Darden Restaurants. However, Wheaton Precious is 1.59 times more volatile than Darden Restaurants. It trades about 0.39 of its potential returns per unit of risk. Darden Restaurants is currently generating about 0.4 per unit of risk. If you would invest 455,500 in Wheaton Precious Metals on November 7, 2024 and sell it today you would earn a total of 56,500 from holding Wheaton Precious Metals or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Darden Restaurants
Performance |
| Timeline |
| Wheaton Precious Metals |
| Darden Restaurants |
Wheaton Precious and Darden Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Darden Restaurants
The main advantage of trading using opposite Wheaton Precious and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Darden Restaurants 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 Darden Restaurants will offset losses from the drop in Darden Restaurants' long position.| Wheaton Precious vs. Sydbank | Wheaton Precious vs. Capital Metals PLC | Wheaton Precious vs. Fulcrum Metals PLC | Wheaton Precious vs. SoftBank Group Corp |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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