Correlation Between Wheaton Precious and Metalero Mining

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

Diversification Opportunities for Wheaton Precious and Metalero Mining

-0.33

Correlation Coefficient

Wheaton Precious  Metalero Mining

Very good diversification

The 3 months correlation between Wheaton and Metalero is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Metalero Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalero Mining 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 Metalero Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalero Mining Corp has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Metalero Mining go up and down completely randomly.

Pair Corralation between Wheaton Precious and Metalero Mining

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.22 times more return on investment than Metalero Mining. However, Wheaton Precious Metals is 4.47 times less risky than Metalero Mining. It trades about 0.31 of its potential returns per unit of risk. Metalero Mining Corp is currently generating about 0.05 per unit of risk. If you would invest  8,091  in Wheaton Precious Metals on December 31, 2024 and sell it today you would earn a total of  2,912  from holding Wheaton Precious Metals or generate 35.99% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Metalero Mining Corp

Wheaton Precious Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Wheaton Precious displayed solid returns over the last few months and may actually be approaching a breakup point.

Metalero Mining Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metalero Mining Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Metalero Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wheaton Precious and Metalero Mining

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

The idea behind Wheaton Precious Metals and Metalero Mining 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..