Correlation Between Hochschild Mining and Wheaton Precious

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

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

Diversification Opportunities for Hochschild Mining and Wheaton Precious

0.77

Correlation Coefficient

Hochschild Mining  Wheaton Precious

Poor diversification

The 3 months correlation between Hochschild and Wheaton is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc 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 Hochschild Mining 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 Hochschild Mining plc 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 Hochschild Mining i.e., Hochschild Mining and Wheaton Precious go up and down completely randomly.

Pair Corralation between Hochschild Mining and Wheaton Precious

Assuming the 90 days horizon Hochschild Mining plc is expected to generate 1.94 times more return on investment than Wheaton Precious. However, Hochschild Mining is 1.94 times more volatile than Wheaton Precious Metals. It trades about 0.08 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  94.00  in Hochschild Mining plc on October 10, 2024 and sell it today you would earn a total of  178.00  from holding Hochschild Mining plc or generate 189.36% return on investment over 90 days.

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

Hochschild Mining plc  vs.  Wheaton Precious Metals

Hochschild Mining plc

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hochschild Mining 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 nearly stable basic indicators, Wheaton Precious is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hochschild Mining and Wheaton Precious

The main advantage of trading using opposite Hochschild Mining and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining 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 Hochschild Mining plc 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 Transaction History module to view history of all your transactions and understand their impact on performance.