Correlation Between Wheaton Precious and American International
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and American International 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 American International 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 American International Group, you can compare the effects of market volatilities on Wheaton Precious and American International 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 American International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and American International.
Diversification Opportunities for Wheaton Precious and American International
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wheaton and American is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International 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 American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and American International go up and down completely randomly.
Pair Corralation between Wheaton Precious and American International
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 1.81 times more return on investment than American International. However, Wheaton Precious is 1.81 times more volatile than American International Group. It trades about 0.14 of its potential returns per unit of risk. American International Group is currently generating about -0.16 per unit of risk. If you would invest 474,480 in Wheaton Precious Metals on September 12, 2024 and sell it today you would earn a total of 25,520 from holding Wheaton Precious Metals or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Wheaton Precious Metals vs. American International Group
Performance |
| Timeline |
| Wheaton Precious Metals |
| American International |
Wheaton Precious and American International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and American International
The main advantage of trading using opposite Wheaton Precious and American International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, American International 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 American International will offset losses from the drop in American International's long position.| Wheaton Precious vs. Givaudan SA | Wheaton Precious vs. Antofagasta PLC | Wheaton Precious vs. Ferrexpo PLC | Wheaton Precious vs. Atalaya Mining |
| American International vs. Coor Service Management | American International vs. Check Point Software | American International vs. SMA Solar Technology | American International vs. BW Offshore |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |