Correlation Between Unite Group and Wheaton Precious

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

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

Diversification Opportunities for Unite Group and Wheaton Precious

-0.28

Correlation Coefficient

Unite Group  Wheaton Precious

Very good diversification

The 3 months correlation between Unite and Wheaton is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Unite Group PLC 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 Unite Group 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 Unite Group PLC 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 Unite Group i.e., Unite Group and Wheaton Precious go up and down completely randomly.

Pair Corralation between Unite Group and Wheaton Precious

Assuming the 90 days trading horizon Unite Group PLC is expected to under-perform the Wheaton Precious. But the stock apears to be less risky and, when comparing its historical volatility, Unite Group PLC is 2.27 times less risky than Wheaton Precious. The stock trades about -0.25 of its potential returns per unit of risk. The Wheaton Precious Metals is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  492,423  in Wheaton Precious Metals on September 18, 2024 and sell it today you would lose (15,923) from holding Wheaton Precious Metals or give up 3.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Unite Group PLC  vs.  Wheaton Precious Metals

Unite Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unite Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 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 rather sound technical and fundamental indicators, Wheaton Precious is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Unite Group and Wheaton Precious

The main advantage of trading using opposite Unite Group and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unite Group 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 Unite Group PLC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.