Correlation Between AMG Advanced and Wheaton Precious

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

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

Diversification Opportunities for AMG Advanced and Wheaton Precious

0.19

Correlation Coefficient

AMG Advanced  Wheaton Precious

Average diversification

The 3 months correlation between AMG and Wheaton is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical 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 AMG Advanced 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 AMG Advanced Metallurgical 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 AMG Advanced i.e., AMG Advanced and Wheaton Precious go up and down completely randomly.

Pair Corralation between AMG Advanced and Wheaton Precious

Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Wheaton Precious. In addition to that, AMG Advanced is 1.12 times more volatile than Wheaton Precious Metals. It trades about -0.11 of its total potential returns per unit of risk. Wheaton Precious Metals is currently generating about -0.02 per unit of volatility. If you would invest  499,401  in Wheaton Precious Metals on September 5, 2024 and sell it today you would lose (5,401) from holding Wheaton Precious Metals or give up 1.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AMG Advanced Metallurgical  vs.  Wheaton Precious Metals

AMG Advanced Metallu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMG Advanced Metallurgical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AMG Advanced is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Wheaton Precious Metals

Risk-Adjusted Performance

4 of 100

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 uncertain technical and fundamental indicators, Wheaton Precious may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AMG Advanced and Wheaton Precious

The main advantage of trading using opposite AMG Advanced and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced 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 AMG Advanced Metallurgical 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.