Correlation Between Wheaton Precious and Argo Group

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

Diversification Opportunities for Wheaton Precious and Argo Group

-0.19

Correlation Coefficient

Wheaton Precious  Argo Group

Good diversification

The 3 months correlation between Wheaton and Argo is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Argo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group Limited 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 Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group Limited has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Argo Group go up and down completely randomly.

Pair Corralation between Wheaton Precious and Argo Group

Assuming the 90 days trading horizon Wheaton Precious is expected to generate 1.74 times less return on investment than Argo Group. But when comparing it to its historical volatility, Wheaton Precious Metals is 1.5 times less risky than Argo Group. It trades about 0.16 of its potential returns per unit of risk. Argo Group Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Argo Group Limited on December 22, 2024 and sell it today you would earn a total of  125.00  from holding Argo Group Limited or generate 31.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.25%
Values	Daily Returns

Wheaton Precious Metals  vs.  Argo Group Limited

Wheaton Precious Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Wheaton Precious exhibited solid returns over the last few months and may actually be approaching a breakup point.

Argo Group Limited

Risk-Adjusted Performance

Good

Over the last 90 days Argo Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady basic indicators, Argo Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wheaton Precious and Argo Group

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

The idea behind Wheaton Precious Metals and Argo Group Limited 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.