Correlation Between MAGNUM COLDCORP and Wheaton Precious

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

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

Diversification Opportunities for MAGNUM COLDCORP and Wheaton Precious

-0.03

Correlation Coefficient

MAGNUM COLDCORP  Wheaton Precious

Good diversification

The 3 months correlation between MAGNUM and Wheaton is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding MAGNUM DCORP INC 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 MAGNUM COLDCORP 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 MAGNUM DCORP INC 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 MAGNUM COLDCORP i.e., MAGNUM COLDCORP and Wheaton Precious go up and down completely randomly.

Pair Corralation between MAGNUM COLDCORP and Wheaton Precious

Assuming the 90 days trading horizon MAGNUM DCORP INC is expected to generate 23.44 times more return on investment than Wheaton Precious. However, MAGNUM COLDCORP is 23.44 times more volatile than Wheaton Precious Metals. It trades about 0.07 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.11 per unit of risk. If you would invest  3.89  in MAGNUM DCORP INC on October 23, 2024 and sell it today you would lose (1.94) from holding MAGNUM DCORP INC or give up 49.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.5%
Values	Daily Returns

MAGNUM DCORP INC  vs.  Wheaton Precious Metals

MAGNUM DCORP INC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MAGNUM DCORP INC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, MAGNUM COLDCORP reported solid returns over the last few months and may actually be approaching a breakup point.

Wheaton Precious Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wheaton Precious Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MAGNUM COLDCORP and Wheaton Precious

The main advantage of trading using opposite MAGNUM COLDCORP and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGNUM COLDCORP 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 MAGNUM DCORP INC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.