Correlation Between Century Aluminum and Wheaton Precious

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

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

Diversification Opportunities for Century Aluminum and Wheaton Precious

-0.09

Correlation Coefficient

Century Aluminum  Wheaton Precious

Good diversification

The 3 months correlation between Century and Wheaton is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum 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 Century Aluminum 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 Century Aluminum 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 Century Aluminum i.e., Century Aluminum and Wheaton Precious go up and down completely randomly.

Pair Corralation between Century Aluminum and Wheaton Precious

Given the investment horizon of 90 days Century Aluminum is expected to generate 2.3 times more return on investment than Wheaton Precious. However, Century Aluminum is 2.3 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  1,639  in Century Aluminum on September 24, 2024 and sell it today you would earn a total of  194.00  from holding Century Aluminum or generate 11.84% return on investment over 90 days.

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

Century Aluminum  vs.  Wheaton Precious Metals

Century Aluminum

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Century Aluminum are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Century Aluminum showed 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. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Century Aluminum and Wheaton Precious

The main advantage of trading using opposite Century Aluminum and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum 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 Century Aluminum 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.