Correlation Between Southern Copper and Wheaton Precious

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

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

Diversification Opportunities for Southern Copper and Wheaton Precious

0.44

Correlation Coefficient

Southern Copper  Wheaton Precious

Very weak diversification

The 3 months correlation between Southern and Wheaton is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper 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 Southern Copper 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 Southern Copper 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 Southern Copper i.e., Southern Copper and Wheaton Precious go up and down completely randomly.

Pair Corralation between Southern Copper and Wheaton Precious

Given the investment horizon of 90 days Southern Copper is expected to generate 1.01 times more return on investment than Wheaton Precious. However, Southern Copper is 1.01 times more volatile than Wheaton Precious Metals. It trades about -0.15 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about -0.24 per unit of risk. If you would invest  9,974  in Southern Copper on September 23, 2024 and sell it today you would lose (673.00) from holding Southern Copper or give up 6.75% of portfolio value over 90 days.

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

Southern Copper  vs.  Wheaton Precious Metals

Southern Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 Southern Copper and Wheaton Precious

The main advantage of trading using opposite Southern Copper and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper 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 Southern Copper 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.