Correlation Between Wheaton Precious and ArcelorMittal

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

Diversification Opportunities for Wheaton Precious and ArcelorMittal

0.43

Correlation Coefficient

Wheaton Precious  ArcelorMittal

Very weak diversification

The 3 months correlation between Wheaton and ArcelorMittal is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and ArcelorMittal go up and down completely randomly.

Pair Corralation between Wheaton Precious and ArcelorMittal

Considering the 90-day investment horizon Wheaton Precious Metals is expected to generate 1.0 times more return on investment than ArcelorMittal. However, Wheaton Precious is 1.0 times more volatile than ArcelorMittal SA ADR. It trades about 0.04 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about -0.02 per unit of risk. If you would invest  4,432  in Wheaton Precious Metals on October 12, 2024 and sell it today you would earn a total of  1,349  from holding Wheaton Precious Metals or generate 30.44% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  ArcelorMittal SA ADR

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 very healthy basic indicators, Wheaton Precious is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

ArcelorMittal SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ArcelorMittal SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Wheaton Precious and ArcelorMittal

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

The idea behind Wheaton Precious Metals and ArcelorMittal SA ADR 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.