Correlation Between Wheaton Precious and BlackRock Frontiers

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

Diversification Opportunities for Wheaton Precious and BlackRock Frontiers

-0.47

Correlation Coefficient

Wheaton Precious  BlackRock Frontiers

Very good diversification

The 3 months correlation between Wheaton and BlackRock is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and BlackRock Frontiers Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Frontiers 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 BlackRock Frontiers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Frontiers has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and BlackRock Frontiers go up and down completely randomly.

Pair Corralation between Wheaton Precious and BlackRock Frontiers

Assuming the 90 days trading horizon Wheaton Precious is expected to generate 9.66 times less return on investment than BlackRock Frontiers. In addition to that, Wheaton Precious is 2.39 times more volatile than BlackRock Frontiers Investment. It trades about 0.01 of its total potential returns per unit of risk. BlackRock Frontiers Investment is currently generating about 0.19 per unit of volatility. If you would invest  14,550  in BlackRock Frontiers Investment on October 11, 2024 and sell it today you would earn a total of  1,550  from holding BlackRock Frontiers Investment or generate 10.65% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  BlackRock Frontiers Investment

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.

BlackRock Frontiers

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Frontiers Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BlackRock Frontiers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Wheaton Precious and BlackRock Frontiers

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

The idea behind Wheaton Precious Metals and BlackRock Frontiers Investment 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.