Correlation Between Wheaton Precious and Northern Star
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Northern Star 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 Northern Star 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 Northern Star Resources, you can compare the effects of market volatilities on Wheaton Precious and Northern Star 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 Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Northern Star.
Diversification Opportunities for Wheaton Precious and Northern Star
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wheaton and Northern is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources 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 Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Northern Star go up and down completely randomly.
Pair Corralation between Wheaton Precious and Northern Star
Considering the 90-day investment horizon Wheaton Precious is expected to generate 4.27 times less return on investment than Northern Star. But when comparing it to its historical volatility, Wheaton Precious Metals is 1.64 times less risky than Northern Star. It trades about 0.04 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 960.00 in Northern Star Resources on August 31, 2024 and sell it today you would earn a total of 180.00 from holding Northern Star Resources or generate 18.75% 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. Northern Star Resources
Performance |
| Timeline |
| Wheaton Precious Metals |
| Northern Star Resources |
Wheaton Precious and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Northern Star
The main advantage of trading using opposite Wheaton Precious and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Northern Star 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 Northern Star will offset losses from the drop in Northern Star's long position.| Wheaton Precious vs. Franco Nevada | Wheaton Precious vs. Alamos Gold | Wheaton Precious vs. Seabridge Gold | Wheaton Precious vs. Agnico Eagle Mines |
| Northern Star vs. Regis Resources | Northern Star vs. West African Resources | Northern Star vs. Dundee Precious Metals | Northern Star vs. Maple Gold Mines |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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