Correlation Between Wheaton Precious and First
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and First 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 First 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 First Class Metals, you can compare the effects of market volatilities on Wheaton Precious and First 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 First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and First.
Diversification Opportunities for Wheaton Precious and First
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wheaton and First is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class Metals 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 First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and First go up and down completely randomly.
Pair Corralation between Wheaton Precious and First
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.72 times more return on investment than First. However, Wheaton Precious Metals is 1.38 times less risky than First. It trades about 0.14 of its potential returns per unit of risk. First Class Metals is currently generating about 0.02 per unit of risk. If you would invest 457,000 in Wheaton Precious Metals on October 24, 2024 and sell it today you would earn a total of 29,000 from holding Wheaton Precious Metals or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. First Class Metals
Performance |
| Timeline |
| Wheaton Precious Metals |
| First Class Metals |
Wheaton Precious and First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and First
The main advantage of trading using opposite Wheaton Precious and First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, First 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 First will offset losses from the drop in First's long position.| Wheaton Precious vs. Adriatic Metals | Wheaton Precious vs. Alien Metals | Wheaton Precious vs. Ecclesiastical Insurance Office | Wheaton Precious vs. Virgin Wines UK |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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