Correlation Between Wheaton Precious and Eco Animal

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

Diversification Opportunities for Wheaton Precious and Eco Animal

-0.1

Correlation Coefficient

Wheaton Precious  Eco Animal

Good diversification

The 3 months correlation between Wheaton and Eco is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Eco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Animal Health 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 Eco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Animal Health has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Eco Animal go up and down completely randomly.

Pair Corralation between Wheaton Precious and Eco Animal

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 1.02 times more return on investment than Eco Animal. However, Wheaton Precious is 1.02 times more volatile than Eco Animal Health. It trades about 0.04 of its potential returns per unit of risk. Eco Animal Health is currently generating about -0.01 per unit of risk. If you would invest  349,756  in Wheaton Precious Metals on October 26, 2024 and sell it today you would earn a total of  126,244  from holding Wheaton Precious Metals or generate 36.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Wheaton Precious Metals  vs.  Eco Animal Health

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.

Eco Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eco Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Eco Animal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wheaton Precious and Eco Animal

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

The idea behind Wheaton Precious Metals and Eco Animal Health 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.