Correlation Between Hilton Food and Wheaton Precious

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

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

Diversification Opportunities for Hilton Food and Wheaton Precious

0.15

Correlation Coefficient

Hilton Food  Wheaton Precious

Average diversification

The 3 months correlation between Hilton and Wheaton is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group 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 Hilton Food 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 Hilton Food Group 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 Hilton Food i.e., Hilton Food and Wheaton Precious go up and down completely randomly.

Pair Corralation between Hilton Food and Wheaton Precious

Assuming the 90 days trading horizon Hilton Food is expected to generate 6.15 times less return on investment than Wheaton Precious. But when comparing it to its historical volatility, Hilton Food Group is 1.82 times less risky than Wheaton Precious. It trades about 0.03 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  457,000  in Wheaton Precious Metals on October 22, 2024 and sell it today you would earn a total of  18,000  from holding Wheaton Precious Metals or generate 3.94% return on investment over 90 days.

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

Hilton Food Group  vs.  Wheaton Precious Metals

Hilton Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hilton Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hilton Food is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Hilton Food and Wheaton Precious

The main advantage of trading using opposite Hilton Food and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food 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 Hilton Food Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.