Correlation Between GlobalData PLC and Wheaton Precious

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

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

Diversification Opportunities for GlobalData PLC and Wheaton Precious

-0.18

Correlation Coefficient

GlobalData PLC  Wheaton Precious

Good diversification

The 3 months correlation between GlobalData and Wheaton is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding GlobalData PLC 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 GlobalData PLC 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 GlobalData PLC 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 GlobalData PLC i.e., GlobalData PLC and Wheaton Precious go up and down completely randomly.

Pair Corralation between GlobalData PLC and Wheaton Precious

Assuming the 90 days trading horizon GlobalData PLC is expected to generate 1.18 times less return on investment than Wheaton Precious. But when comparing it to its historical volatility, GlobalData PLC is 1.21 times less risky than Wheaton Precious. It trades about 0.03 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  346,846  in Wheaton Precious Metals on September 29, 2024 and sell it today you would earn a total of  105,154  from holding Wheaton Precious Metals or generate 30.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

GlobalData PLC  vs.  Wheaton Precious Metals

GlobalData PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GlobalData PLC and Wheaton Precious

The main advantage of trading using opposite GlobalData PLC and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalData PLC 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 GlobalData PLC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.