Correlation Between Wheaton Precious and Lion One

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

Diversification Opportunities for Wheaton Precious and Lion One

0.3

Correlation Coefficient

Wheaton Precious  Lion One

Weak diversification

The 3 months correlation between Wheaton and Lion is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Lion One go up and down completely randomly.

Pair Corralation between Wheaton Precious and Lion One

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to under-perform the Lion One. But the stock apears to be less risky and, when comparing its historical volatility, Wheaton Precious Metals is 2.95 times less risky than Lion One. The stock trades about -0.14 of its potential returns per unit of risk. The Lion One Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Lion One Metals on October 6, 2024 and sell it today you would earn a total of  3.00  from holding Lion One Metals or generate 12.0% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Lion One Metals

Wheaton Precious Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Wheaton Precious is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Wheaton Precious and Lion One

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

The idea behind Wheaton Precious Metals and Lion One Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.