Correlation Between Microchip Technology and Wheaton Precious

Can any of the company-specific risk be diversified away by investing in both Microchip Technology and Wheaton Precious 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 Microchip Technology and Wheaton Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microchip Technology and Wheaton Precious Metals, you can compare the effects of market volatilities on Microchip Technology and Wheaton Precious 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 Microchip Technology with a short position of Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microchip Technology and Wheaton Precious.

Diversification Opportunities for Microchip Technology and Wheaton Precious

-0.13

Correlation Coefficient

Microchip Technology  Wheaton Precious

Good diversification

The 3 months correlation between Microchip and Wheaton is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals and Microchip Technology 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 Microchip Technology are associated (or correlated) with Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Microchip Technology i.e., Microchip Technology and Wheaton Precious go up and down completely randomly.

Pair Corralation between Microchip Technology and Wheaton Precious

Assuming the 90 days trading horizon Microchip Technology is expected to under-perform the Wheaton Precious. But the stock apears to be less risky and, when comparing its historical volatility, Microchip Technology is 1.04 times less risky than Wheaton Precious. The stock trades about -0.06 of its potential returns per unit of risk. The Wheaton Precious Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  459,030  in Wheaton Precious Metals on September 4, 2024 and sell it today you would earn a total of  25,970  from holding Wheaton Precious Metals or generate 5.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Microchip Technology  vs.  Wheaton Precious Metals

Microchip Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microchip Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Wheaton Precious Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Wheaton Precious may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Microchip Technology and Wheaton Precious

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

The idea behind Microchip Technology and Wheaton Precious 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.