Correlation Between Wheaton Precious and Revolution Beauty

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

Diversification Opportunities for Wheaton Precious and Revolution Beauty

-0.63

Correlation Coefficient

Wheaton Precious  Revolution Beauty

Excellent diversification

The 3 months correlation between Wheaton and Revolution is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Revolution Beauty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Beauty 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 Revolution Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Beauty has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Revolution Beauty go up and down completely randomly.

Pair Corralation between Wheaton Precious and Revolution Beauty

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.31 times more return on investment than Revolution Beauty. However, Wheaton Precious Metals is 3.24 times less risky than Revolution Beauty. It trades about 0.05 of its potential returns per unit of risk. Revolution Beauty Group is currently generating about -0.01 per unit of risk. If you would invest  485,000  in Wheaton Precious Metals on December 2, 2024 and sell it today you would earn a total of  29,000  from holding Wheaton Precious Metals or generate 5.98% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Revolution Beauty Group

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.

Revolution Beauty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Revolution Beauty Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Revolution Beauty 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 Revolution Beauty

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

The idea behind Wheaton Precious Metals and Revolution Beauty Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.