Correlation Between Nucor Corp and Wheaton Precious

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

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

Diversification Opportunities for Nucor Corp and Wheaton Precious

0.57

Correlation Coefficient

Nucor Corp  Wheaton Precious

Very weak diversification

The 3 months correlation between Nucor and Wheaton is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp 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 Nucor Corp 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 Nucor Corp 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 Nucor Corp i.e., Nucor Corp and Wheaton Precious go up and down completely randomly.

Pair Corralation between Nucor Corp and Wheaton Precious

Considering the 90-day investment horizon Nucor Corp is expected to under-perform the Wheaton Precious. In addition to that, Nucor Corp is 1.1 times more volatile than Wheaton Precious Metals. It trades about -0.05 of its total potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.05 per unit of volatility. If you would invest  4,729  in Wheaton Precious Metals on October 9, 2024 and sell it today you would earn a total of  955.00  from holding Wheaton Precious Metals or generate 20.19% return on investment over 90 days.

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

Nucor Corp  vs.  Wheaton Precious Metals

Nucor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm 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 very healthy basic indicators, Wheaton Precious is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nucor Corp and Wheaton Precious

The main advantage of trading using opposite Nucor Corp and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor Corp 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 Nucor Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.