Correlation Between Wheaton Precious and United Internet

Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and United Internet 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 United Internet 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 United Internet AG, you can compare the effects of market volatilities on Wheaton Precious and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and United Internet.

Diversification Opportunities for Wheaton Precious and United Internet

0.36

Correlation Coefficient

Wheaton Precious  United Internet

Weak diversification

The 3 months correlation between Wheaton and United is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and United Internet go up and down completely randomly.

Pair Corralation between Wheaton Precious and United Internet

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 1.3 times more return on investment than United Internet. However, Wheaton Precious is 1.3 times more volatile than United Internet AG. It trades about 0.04 of its potential returns per unit of risk. United Internet AG is currently generating about -0.06 per unit of risk. If you would invest  377,671  in Wheaton Precious Metals on October 7, 2024 and sell it today you would earn a total of  87,329  from holding Wheaton Precious Metals or generate 23.12% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  United Internet AG

Wheaton Precious Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

United Internet AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Internet AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Wheaton Precious and United Internet

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

The idea behind Wheaton Precious Metals and United Internet AG 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.