Correlation Between Tree Island and Wheaton Precious

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

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

Diversification Opportunities for Tree Island and Wheaton Precious

-0.2

Correlation Coefficient

Tree Island  Wheaton Precious

Good diversification

The 3 months correlation between Tree and Wheaton is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tree Island Steel 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 Tree Island 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 Tree Island Steel 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 Tree Island i.e., Tree Island and Wheaton Precious go up and down completely randomly.

Pair Corralation between Tree Island and Wheaton Precious

Assuming the 90 days trading horizon Tree Island is expected to generate 2.12 times less return on investment than Wheaton Precious. In addition to that, Tree Island is 1.26 times more volatile than Wheaton Precious Metals. It trades about 0.02 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  5,946  in Wheaton Precious Metals on October 5, 2024 and sell it today you would earn a total of  2,420  from holding Wheaton Precious Metals or generate 40.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.78%
Values	Daily Returns

Tree Island Steel  vs.  Wheaton Precious Metals

Tree Island Steel

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tree Island Steel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Tree Island may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wheaton Precious Metals

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Wheaton Precious is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Tree Island and Wheaton Precious

The main advantage of trading using opposite Tree Island and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tree Island 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 Tree Island Steel 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.