Correlation Between Wheaton Precious and European Metals
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on Wheaton Precious and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and European Metals.
Diversification Opportunities for Wheaton Precious and European Metals
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wheaton and European is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and European Metals go up and down completely randomly.
Pair Corralation between Wheaton Precious and European Metals
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.82 times more return on investment than European Metals. However, Wheaton Precious Metals is 1.22 times less risky than European Metals. It trades about 0.04 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.22 per unit of risk. If you would invest 444,125 in Wheaton Precious Metals on August 28, 2024 and sell it today you would earn a total of 51,875 from holding Wheaton Precious Metals or generate 11.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Wheaton Precious Metals vs. European Metals Holdings
Performance |
| Timeline |
| Wheaton Precious Metals |
| European Metals Holdings |
Wheaton Precious and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and European Metals
The main advantage of trading using opposite Wheaton Precious and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Wheaton Precious vs. Atalaya Mining | Wheaton Precious vs. iShares Physical Silver | Wheaton Precious vs. Indutrade AB | Wheaton Precious vs. Anglesey Mining |
| European Metals vs. Givaudan SA | European Metals vs. Antofagasta PLC | European Metals vs. Centamin PLC | European Metals vs. Atalaya Mining |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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