Correlation Between Wheaton Precious and Equinox Gold
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Equinox Gold 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 Equinox Gold 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 Equinox Gold Corp, you can compare the effects of market volatilities on Wheaton Precious and Equinox Gold 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 Equinox Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Equinox Gold.
Diversification Opportunities for Wheaton Precious and Equinox Gold
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wheaton and Equinox is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Equinox Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinox Gold Corp 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 Equinox Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinox Gold Corp has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Equinox Gold go up and down completely randomly.
Pair Corralation between Wheaton Precious and Equinox Gold
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.58 times more return on investment than Equinox Gold. However, Wheaton Precious Metals is 1.74 times less risky than Equinox Gold. It trades about 0.1 of its potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.06 per unit of risk. If you would invest 7,222 in Wheaton Precious Metals on September 5, 2024 and sell it today you would earn a total of 1,659 from holding Wheaton Precious Metals or generate 22.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Equinox Gold Corp
Performance |
| Timeline |
| Wheaton Precious Metals |
| Equinox Gold Corp |
Wheaton Precious and Equinox Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Equinox Gold
The main advantage of trading using opposite Wheaton Precious and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Equinox Gold 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 Equinox Gold will offset losses from the drop in Equinox Gold's long position.| Wheaton Precious vs. Franco Nevada | Wheaton Precious vs. Pan American Silver | Wheaton Precious vs. Agnico Eagle Mines | Wheaton Precious vs. Sandstorm Gold Ltd |
| Equinox Gold vs. Sandstorm Gold Ltd | Equinox Gold vs. Pan American Silver | Equinox Gold vs. SSR Mining | Equinox Gold vs. SilverCrest Metals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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