Correlation Between Wheaton Precious and Chocoladefabriken

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

Diversification Opportunities for Wheaton Precious and Chocoladefabriken

0.42

Correlation Coefficient

Wheaton Precious  Chocoladefabriken

Very weak diversification

The 3 months correlation between Wheaton and Chocoladefabriken is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt 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 Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Wheaton Precious and Chocoladefabriken

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 2.55 times more return on investment than Chocoladefabriken. However, Wheaton Precious is 2.55 times more volatile than Chocoladefabriken Lindt Spruengli. It trades about 0.1 of its potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about 0.15 per unit of risk. If you would invest  457,000  in Wheaton Precious Metals on October 22, 2024 and sell it today you would earn a total of  18,000  from holding Wheaton Precious Metals or generate 3.94% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Chocoladefabriken Lindt Spruen

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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Spruengli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Chocoladefabriken is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wheaton Precious and Chocoladefabriken

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

The idea behind Wheaton Precious Metals and Chocoladefabriken Lindt Spruengli 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.