Correlation Between Wheaton Precious and Metals Exploration
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Metals Exploration 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 Metals Exploration 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 Metals Exploration Plc, you can compare the effects of market volatilities on Wheaton Precious and Metals Exploration 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 Metals Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Metals Exploration.
Diversification Opportunities for Wheaton Precious and Metals Exploration
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wheaton and Metals is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Metals Exploration Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Exploration 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 Metals Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Exploration Plc has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Metals Exploration go up and down completely randomly.
Pair Corralation between Wheaton Precious and Metals Exploration
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.74 times more return on investment than Metals Exploration. However, Wheaton Precious Metals is 1.35 times less risky than Metals Exploration. It trades about -0.1 of its potential returns per unit of risk. Metals Exploration Plc is currently generating about -0.15 per unit of risk. If you would invest 510,365 in Wheaton Precious Metals on August 29, 2024 and sell it today you would lose (22,865) from holding Wheaton Precious Metals or give up 4.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Metals Exploration Plc
Performance |
| Timeline |
| Wheaton Precious Metals |
| Metals Exploration Plc |
Wheaton Precious and Metals Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Metals Exploration
The main advantage of trading using opposite Wheaton Precious and Metals Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Metals Exploration 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 Metals Exploration will offset losses from the drop in Metals Exploration's long position.| Wheaton Precious vs. Atalaya Mining | Wheaton Precious vs. iShares Physical Silver | Wheaton Precious vs. Indutrade AB | Wheaton Precious vs. Anglesey Mining |
| Metals Exploration vs. Givaudan SA | Metals Exploration vs. Antofagasta PLC | Metals Exploration vs. Centamin PLC | Metals Exploration 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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