Correlation Between Wheaton Precious and GoldMining
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on Wheaton Precious and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and GoldMining.
Diversification Opportunities for Wheaton Precious and GoldMining
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wheaton and GoldMining is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and GoldMining go up and down completely randomly.
Pair Corralation between Wheaton Precious and GoldMining
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.6 times more return on investment than GoldMining. However, Wheaton Precious Metals is 1.66 times less risky than GoldMining. It trades about 0.05 of its potential returns per unit of risk. GoldMining is currently generating about -0.03 per unit of risk. If you would invest 309,493 in Wheaton Precious Metals on August 28, 2024 and sell it today you would earn a total of 186,507 from holding Wheaton Precious Metals or generate 60.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 35.13% |
| Values | Daily Returns |
Wheaton Precious Metals vs. GoldMining
Performance |
| Timeline |
| Wheaton Precious Metals |
| GoldMining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Wheaton Precious and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and GoldMining
The main advantage of trading using opposite Wheaton Precious and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Wheaton Precious vs. Givaudan SA | Wheaton Precious vs. Antofagasta PLC | Wheaton Precious vs. Centamin PLC | Wheaton Precious vs. Atalaya Mining |
| GoldMining vs. Samsung Electronics Co | GoldMining vs. Samsung Electronics Co | GoldMining vs. Hyundai Motor | GoldMining vs. Toyota Motor 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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