Correlation Between Wheaton Precious and Guaranty Trust

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

Diversification Opportunities for Wheaton Precious and Guaranty Trust

0.69

Correlation Coefficient

Wheaton Precious  Guaranty Trust

Poor diversification

The 3 months correlation between Wheaton and Guaranty is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Guaranty Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guaranty Trust Holding 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 Guaranty Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guaranty Trust Holding has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Guaranty Trust go up and down completely randomly.

Pair Corralation between Wheaton Precious and Guaranty Trust

Assuming the 90 days trading horizon Wheaton Precious is expected to generate 1.99 times less return on investment than Guaranty Trust. But when comparing it to its historical volatility, Wheaton Precious Metals is 1.85 times less risky than Guaranty Trust. It trades about 0.05 of its potential returns per unit of risk. Guaranty Trust Holding is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Guaranty Trust Holding on December 2, 2024 and sell it today you would earn a total of  18.00  from holding Guaranty Trust Holding or generate 9.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Wheaton Precious Metals  vs.  Guaranty Trust Holding

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 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Wheaton Precious may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Guaranty Trust Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Guaranty Trust disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wheaton Precious and Guaranty Trust

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

The idea behind Wheaton Precious Metals and Guaranty Trust Holding 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.