Correlation Between Wheaton Precious and Grande Portage

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

Diversification Opportunities for Wheaton Precious and Grande Portage

0.81

Correlation Coefficient

Wheaton Precious  Grande Portage

Very poor diversification

The 3 months correlation between Wheaton and Grande is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Grande Portage Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Portage Resources 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 Grande Portage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Portage Resources has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Grande Portage go up and down completely randomly.

Pair Corralation between Wheaton Precious and Grande Portage

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.3 times more return on investment than Grande Portage. However, Wheaton Precious Metals is 3.37 times less risky than Grande Portage. It trades about -0.07 of its potential returns per unit of risk. Grande Portage Resources is currently generating about -0.05 per unit of risk. If you would invest  9,244  in Wheaton Precious Metals on October 21, 2024 and sell it today you would lose (891.00) from holding Wheaton Precious Metals or give up 9.64% of portfolio value over 90 days.

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

Wheaton Precious Metals  vs.  Grande Portage Resources

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 unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Grande Portage Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Portage Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Wheaton Precious and Grande Portage

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

The idea behind Wheaton Precious Metals and Grande Portage Resources 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 Transaction History module to view history of all your transactions and understand their impact on performance.