Correlation Between Wheaton Precious and Old Mutual
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Old Mutual 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 Old Mutual 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 Old Mutual, you can compare the effects of market volatilities on Wheaton Precious and Old Mutual 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 Old Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Old Mutual.
Diversification Opportunities for Wheaton Precious and Old Mutual
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wheaton and Old is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Old Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Mutual 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 Old Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Mutual has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Old Mutual go up and down completely randomly.
Pair Corralation between Wheaton Precious and Old Mutual
Assuming the 90 days trading horizon Wheaton Precious is expected to generate 4.5 times less return on investment than Old Mutual. But when comparing it to its historical volatility, Wheaton Precious Metals is 3.55 times less risky than Old Mutual. It trades about 0.06 of its potential returns per unit of risk. Old Mutual is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,899 in Old Mutual on September 3, 2024 and sell it today you would earn a total of 3,621 from holding Old Mutual or generate 190.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Old Mutual
Performance |
| Timeline |
| Wheaton Precious Metals |
| Old Mutual |
Wheaton Precious and Old Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Old Mutual
The main advantage of trading using opposite Wheaton Precious and Old Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Old Mutual 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 Old Mutual will offset losses from the drop in Old Mutual's long position.| Wheaton Precious vs. Roper Technologies | Wheaton Precious vs. Microchip Technology | Wheaton Precious vs. Tyson Foods Cl | Wheaton Precious vs. Uber Technologies |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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