Correlation Between Wheaton Precious and Fortuna Silver
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Fortuna Silver 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 Fortuna Silver 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 Fortuna Silver Mines, you can compare the effects of market volatilities on Wheaton Precious and Fortuna Silver 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 Fortuna Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Fortuna Silver.
Diversification Opportunities for Wheaton Precious and Fortuna Silver
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wheaton and Fortuna is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver Mines 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 Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Fortuna Silver go up and down completely randomly.
Pair Corralation between Wheaton Precious and Fortuna Silver
Considering the 90-day investment horizon Wheaton Precious is expected to generate 1.2 times less return on investment than Fortuna Silver. But when comparing it to its historical volatility, Wheaton Precious Metals is 1.76 times less risky than Fortuna Silver. It trades about 0.07 of its potential returns per unit of risk. Fortuna Silver Mines is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 394.00 in Fortuna Silver Mines on August 24, 2024 and sell it today you would earn a total of 106.00 from holding Fortuna Silver Mines or generate 26.9% 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. Fortuna Silver Mines
Performance |
| Timeline |
| Wheaton Precious Metals |
| Fortuna Silver Mines |
Wheaton Precious and Fortuna Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Fortuna Silver
The main advantage of trading using opposite Wheaton Precious and Fortuna Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Fortuna Silver 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 Fortuna Silver will offset losses from the drop in Fortuna Silver's long position.| Wheaton Precious vs. Gold Fields Ltd | Wheaton Precious vs. Barrick Gold Corp | Wheaton Precious vs. Pan American Silver | Wheaton Precious vs. Franco Nevada |
| Fortuna Silver vs. Pan American Silver | Fortuna Silver vs. Harmony Gold Mining | Fortuna Silver vs. IAMGold | Fortuna Silver vs. Kinross Gold |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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