Correlation Between Wheaton Precious and Naturhouse Health
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Naturhouse Health 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 Naturhouse Health 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 Naturhouse Health SA, you can compare the effects of market volatilities on Wheaton Precious and Naturhouse Health 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 Naturhouse Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Naturhouse Health.
Diversification Opportunities for Wheaton Precious and Naturhouse Health
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wheaton and Naturhouse is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Naturhouse Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturhouse Health 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 Naturhouse Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturhouse Health has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Naturhouse Health go up and down completely randomly.
Pair Corralation between Wheaton Precious and Naturhouse Health
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 1.87 times more return on investment than Naturhouse Health. However, Wheaton Precious is 1.87 times more volatile than Naturhouse Health SA. It trades about 0.06 of its potential returns per unit of risk. Naturhouse Health SA is currently generating about 0.05 per unit of risk. If you would invest 367,317 in Wheaton Precious Metals on December 12, 2024 and sell it today you would earn a total of 177,683 from holding Wheaton Precious Metals or generate 48.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.67% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Naturhouse Health SA
Performance |
| Timeline |
| Wheaton Precious Metals |
| Naturhouse Health |
Wheaton Precious and Naturhouse Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Naturhouse Health
The main advantage of trading using opposite Wheaton Precious and Naturhouse Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Naturhouse Health 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 Naturhouse Health will offset losses from the drop in Naturhouse Health's long position.| Wheaton Precious vs. Catalyst Media Group | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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