Correlation Between Wheaton Precious and Johnson Matthey
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Johnson Matthey 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 Johnson Matthey 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 Johnson Matthey PLC, you can compare the effects of market volatilities on Wheaton Precious and Johnson Matthey 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 Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Johnson Matthey.
Diversification Opportunities for Wheaton Precious and Johnson Matthey
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wheaton and Johnson is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey PLC 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 Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Johnson Matthey go up and down completely randomly.
Pair Corralation between Wheaton Precious and Johnson Matthey
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 1.7 times more return on investment than Johnson Matthey. However, Wheaton Precious is 1.7 times more volatile than Johnson Matthey PLC. It trades about 0.05 of its potential returns per unit of risk. Johnson Matthey PLC is currently generating about 0.0 per unit of risk. If you would invest 357,505 in Wheaton Precious Metals on September 14, 2024 and sell it today you would earn a total of 124,495 from holding Wheaton Precious Metals or generate 34.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Johnson Matthey PLC
Performance |
| Timeline |
| Wheaton Precious Metals |
| Johnson Matthey PLC |
Wheaton Precious and Johnson Matthey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Johnson Matthey
The main advantage of trading using opposite Wheaton Precious and Johnson Matthey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Johnson Matthey 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 Johnson Matthey will offset losses from the drop in Johnson Matthey's long position.| Wheaton Precious vs. Givaudan SA | Wheaton Precious vs. Antofagasta PLC | Wheaton Precious vs. Ferrexpo PLC | Wheaton Precious vs. Atalaya Mining |
| Johnson Matthey vs. Symphony Environmental Technologies | Johnson Matthey vs. Central Asia Metals | Johnson Matthey vs. Wheaton Precious Metals | Johnson Matthey vs. Blackrock World 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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