Correlation Between Wheaton Precious and Identiv

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

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

Diversification Opportunities for Wheaton Precious and Identiv

-0.73

Correlation Coefficient

Wheaton Precious  Identiv

Pay attention - limited upside

The 3 months correlation between Wheaton and Identiv is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Wheaton Precious 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 Wheaton Precious Metals are associated (or correlated) with Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Identiv go up and down completely randomly.

Pair Corralation between Wheaton Precious and Identiv

Assuming the 90 days horizon Wheaton Precious Metals is expected to generate 0.43 times more return on investment than Identiv. However, Wheaton Precious Metals is 2.33 times less risky than Identiv. It trades about 0.26 of its potential returns per unit of risk. Identiv is currently generating about -0.05 per unit of risk. If you would invest  5,478  in Wheaton Precious Metals on December 30, 2024 and sell it today you would earn a total of  1,596  from holding Wheaton Precious Metals or generate 29.13% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Identiv

Wheaton Precious Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Wheaton Precious reported solid returns over the last few months and may actually be approaching a breakup point.

Identiv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Identiv has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Wheaton Precious and Identiv

The main advantage of trading using opposite Wheaton Precious and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Identiv 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 Identiv will offset losses from the drop in Identiv's long position.

The idea behind Wheaton Precious Metals and Identiv 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.