Correlation Between Wheaton Precious and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Wheaton Precious and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and SMA Solar.
Diversification Opportunities for Wheaton Precious and SMA Solar
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wheaton and SMA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and SMA Solar go up and down completely randomly.
Pair Corralation between Wheaton Precious and SMA Solar
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to under-perform the SMA Solar. But the stock apears to be less risky and, when comparing its historical volatility, Wheaton Precious Metals is 1.56 times less risky than SMA Solar. The stock trades about -0.03 of its potential returns per unit of risk. The SMA Solar Technology is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,318 in SMA Solar Technology on October 17, 2024 and sell it today you would earn a total of 246.00 from holding SMA Solar Technology or generate 18.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. SMA Solar Technology
Performance |
| Timeline |
| Wheaton Precious Metals |
| SMA Solar Technology |
Wheaton Precious and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and SMA Solar
The main advantage of trading using opposite Wheaton Precious and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Wheaton Precious vs. Odfjell Drilling | Wheaton Precious vs. Thor Mining PLC | Wheaton Precious vs. Fulcrum Metals PLC | Wheaton Precious vs. First Class Metals |
| SMA Solar vs. Inspiration Healthcare Group | SMA Solar vs. Wheaton Precious Metals | SMA Solar vs. HCA Healthcare | SMA Solar vs. Travel Leisure Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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