Correlation Between Wheaton Precious and Sydbank

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

Diversification Opportunities for Wheaton Precious and Sydbank

-0.29

Correlation Coefficient

Wheaton Precious  Sydbank

Very good diversification

The 3 months correlation between Wheaton and Sydbank is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank 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 Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Sydbank go up and down completely randomly.

Pair Corralation between Wheaton Precious and Sydbank

Assuming the 90 days trading horizon Wheaton Precious is expected to generate 1.2 times less return on investment than Sydbank. In addition to that, Wheaton Precious is 1.81 times more volatile than Sydbank. It trades about 0.04 of its total potential returns per unit of risk. Sydbank is currently generating about 0.09 per unit of volatility. If you would invest  28,138  in Sydbank on October 9, 2024 and sell it today you would earn a total of  10,742  from holding Sydbank or generate 38.18% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Sydbank

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.

Sydbank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sydbank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wheaton Precious and Sydbank

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

The idea behind Wheaton Precious Metals and Sydbank 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.