Correlation Between Wheaton Precious and United States
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on Wheaton Precious and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and United States.
Diversification Opportunities for Wheaton Precious and United States
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wheaton and United is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and United States go up and down completely randomly.
Pair Corralation between Wheaton Precious and United States
Considering the 90-day investment horizon Wheaton Precious Metals is expected to generate 0.59 times more return on investment than United States. However, Wheaton Precious Metals is 1.69 times less risky than United States. It trades about 0.05 of its potential returns per unit of risk. United States Steel is currently generating about 0.03 per unit of risk. If you would invest 3,961 in Wheaton Precious Metals on September 23, 2024 and sell it today you would earn a total of 1,750 from holding Wheaton Precious Metals or generate 44.18% 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. United States Steel
Performance |
| Timeline |
| Wheaton Precious Metals |
| United States Steel |
Wheaton Precious and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and United States
The main advantage of trading using opposite Wheaton Precious and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Wheaton Precious vs. Royal Gold | Wheaton Precious vs. Agnico Eagle Mines | Wheaton Precious vs. Sandstorm Gold Ltd | Wheaton Precious vs. Osisko Gold Ro |
| United States vs. Wheaton Precious Metals | United States vs. Royal Gold | United States vs. Agnico Eagle Mines | United States vs. Sandstorm Gold Ltd |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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