Correlation Between Anglo Asian and Wheaton Precious

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

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

Diversification Opportunities for Anglo Asian and Wheaton Precious

0.57

Correlation Coefficient

Anglo Asian  Wheaton Precious

Very weak diversification

The 3 months correlation between Anglo and Wheaton is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Anglo Asian Mining 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 Anglo Asian 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 Anglo Asian Mining 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 Anglo Asian i.e., Anglo Asian and Wheaton Precious go up and down completely randomly.

Pair Corralation between Anglo Asian and Wheaton Precious

Assuming the 90 days trading horizon Anglo Asian Mining is expected to under-perform the Wheaton Precious. In addition to that, Anglo Asian is 1.24 times more volatile than Wheaton Precious Metals. It trades about -0.24 of its total potential returns per unit of risk. Wheaton Precious Metals is currently generating about -0.13 per unit of volatility. If you would invest  514,353  in Wheaton Precious Metals on August 31, 2024 and sell it today you would lose (28,853) from holding Wheaton Precious Metals or give up 5.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Anglo Asian Mining  vs.  Wheaton Precious Metals

Anglo Asian Mining

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo Asian Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Anglo Asian exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 rather sound technical and fundamental indicators, Wheaton Precious is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Anglo Asian and Wheaton Precious

The main advantage of trading using opposite Anglo Asian and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo Asian 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 Anglo Asian Mining 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.