Correlation Between Wheaton Precious and Sprott Physical
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Sprott Physical 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 Sprott Physical 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 Sprott Physical Gold, you can compare the effects of market volatilities on Wheaton Precious and Sprott Physical 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 Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Sprott Physical.
Diversification Opportunities for Wheaton Precious and Sprott Physical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wheaton and Sprott is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Sprott Physical go up and down completely randomly.
Pair Corralation between Wheaton Precious and Sprott Physical
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 2.0 times more return on investment than Sprott Physical. However, Wheaton Precious is 2.0 times more volatile than Sprott Physical Gold. It trades about 0.07 of its potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.13 per unit of risk. If you would invest 7,451 in Wheaton Precious Metals on August 29, 2024 and sell it today you would earn a total of 1,206 from holding Wheaton Precious Metals or generate 16.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Sprott Physical Gold
Performance |
| Timeline |
| Wheaton Precious Metals |
| Sprott Physical Gold |
Wheaton Precious and Sprott Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Sprott Physical
The main advantage of trading using opposite Wheaton Precious and Sprott Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Sprott Physical 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 Sprott Physical will offset losses from the drop in Sprott Physical'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 |
| Sprott Physical vs. Microsoft Corp CDR | Sprott Physical vs. Apple Inc CDR | Sprott Physical vs. Alphabet Inc CDR | Sprott Physical vs. Amazon CDR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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