Correlation Between Wheaton Precious and Klondike Silver

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

Diversification Opportunities for Wheaton Precious and Klondike Silver

0.7

Correlation Coefficient

Wheaton Precious  Klondike Silver

Poor diversification

The 3 months correlation between Wheaton and Klondike is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Klondike Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klondike Silver Corp 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 Klondike Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klondike Silver Corp has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Klondike Silver go up and down completely randomly.

Pair Corralation between Wheaton Precious and Klondike Silver

Assuming the 90 days trading horizon Wheaton Precious is expected to generate 3.41 times less return on investment than Klondike Silver. But when comparing it to its historical volatility, Wheaton Precious Metals is 6.42 times less risky than Klondike Silver. It trades about 0.06 of its potential returns per unit of risk. Klondike Silver Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Klondike Silver Corp on October 21, 2024 and sell it today you would lose (3.00) from holding Klondike Silver Corp or give up 75.0% of portfolio value over 90 days.

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

Wheaton Precious Metals  vs.  Klondike Silver Corp

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.

Klondike Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Klondike Silver Corp 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 Klondike Silver

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

The idea behind Wheaton Precious Metals and Klondike Silver Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.