Correlation Between Innovative Industrial and Wheaton Precious

Can any of the company-specific risk be diversified away by investing in both Innovative Industrial and Wheaton Precious 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 Innovative Industrial and Wheaton Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Innovative Industrial Properties and Wheaton Precious Metals, you can compare the effects of market volatilities on Innovative Industrial and Wheaton Precious 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 Innovative Industrial with a short position of Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Industrial and Wheaton Precious.

Diversification Opportunities for Innovative Industrial and Wheaton Precious

0.03

Correlation Coefficient

Innovative Industrial  Wheaton Precious

Significant diversification

The 3 months correlation between Innovative and Wheaton is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Industrial Properti and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals and Innovative Industrial 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 Innovative Industrial Properties are associated (or correlated) with Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Innovative Industrial i.e., Innovative Industrial and Wheaton Precious go up and down completely randomly.

Pair Corralation between Innovative Industrial and Wheaton Precious

Assuming the 90 days trading horizon Innovative Industrial Properties is expected to generate 12.74 times more return on investment than Wheaton Precious. However, Innovative Industrial is 12.74 times more volatile than Wheaton Precious Metals. It trades about 0.04 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.04 per unit of risk. If you would invest  6,915  in Innovative Industrial Properties on December 2, 2024 and sell it today you would earn a total of  441.00  from holding Innovative Industrial Properties or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.39%
Values	Daily Returns

Innovative Industrial Properti  vs.  Wheaton Precious Metals

Innovative Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovative Industrial Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Wheaton Precious Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Wheaton Precious may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Innovative Industrial and Wheaton Precious

The main advantage of trading using opposite Innovative Industrial and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Industrial position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' long position.

The idea behind Innovative Industrial Properties and Wheaton Precious Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.