Correlation Between Wheaton Precious and State Street
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and State Street 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 State Street 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 State Street Corp, you can compare the effects of market volatilities on Wheaton Precious and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and State Street.
Diversification Opportunities for Wheaton Precious and State Street
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wheaton and State is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and State Street go up and down completely randomly.
Pair Corralation between Wheaton Precious and State Street
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 1.91 times more return on investment than State Street. However, Wheaton Precious is 1.91 times more volatile than State Street Corp. It trades about 0.06 of its potential returns per unit of risk. State Street Corp is currently generating about 0.09 per unit of risk. If you would invest 334,905 in Wheaton Precious Metals on September 12, 2024 and sell it today you would earn a total of 165,095 from holding Wheaton Precious Metals or generate 49.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.59% |
| Values | Daily Returns |
Wheaton Precious Metals vs. State Street Corp
Performance |
| Timeline |
| Wheaton Precious Metals |
| State Street Corp |
Wheaton Precious and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and State Street
The main advantage of trading using opposite Wheaton Precious and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Wheaton Precious vs. Givaudan SA | Wheaton Precious vs. Antofagasta PLC | Wheaton Precious vs. Ferrexpo PLC | Wheaton Precious vs. Atalaya Mining |
| State Street vs. Symphony Environmental Technologies | State Street vs. Caledonia Mining | State Street vs. TechnipFMC PLC | State Street vs. Monster Beverage Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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