Correlation Between Wheaton Precious and Vista Gold

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

Diversification Opportunities for Wheaton Precious and Vista Gold

0.02

Correlation Coefficient

Wheaton Precious  Vista Gold

Significant diversification

The 3 months correlation between Wheaton and Vista is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Vista Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Gold 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 Vista Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Gold has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Vista Gold go up and down completely randomly.

Pair Corralation between Wheaton Precious and Vista Gold

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to under-perform the Vista Gold. But the stock apears to be less risky and, when comparing its historical volatility, Wheaton Precious Metals is 2.37 times less risky than Vista Gold. The stock trades about -0.14 of its potential returns per unit of risk. The Vista Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  81.00  in Vista Gold on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Vista Gold or generate 0.0% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Vista Gold

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.

Vista Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vista Gold 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Wheaton Precious and Vista Gold

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

The idea behind Wheaton Precious Metals and Vista Gold 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.