Correlation Between Wheaton Precious and Ecclesiastical Insurance

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

Diversification Opportunities for Wheaton Precious and Ecclesiastical Insurance

0.72

Correlation Coefficient

Wheaton Precious  Ecclesiastical Insurance

Poor diversification

The 3 months correlation between Wheaton and Ecclesiastical is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance 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 Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Ecclesiastical Insurance go up and down completely randomly.

Pair Corralation between Wheaton Precious and Ecclesiastical Insurance

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 2.01 times more return on investment than Ecclesiastical Insurance. However, Wheaton Precious is 2.01 times more volatile than Ecclesiastical Insurance Office. It trades about 0.04 of its potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about 0.07 per unit of risk. If you would invest  494,000  in Wheaton Precious Metals on December 3, 2024 and sell it today you would earn a total of  20,000  from holding Wheaton Precious Metals or generate 4.05% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Ecclesiastical Insurance Offic

Wheaton Precious Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Wheaton Precious is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ecclesiastical Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ecclesiastical Insurance Office are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ecclesiastical Insurance 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 Ecclesiastical Insurance

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

The idea behind Wheaton Precious Metals and Ecclesiastical Insurance Office 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.