Correlation Between Seabridge Gold and Wheaton Precious

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

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

Diversification Opportunities for Seabridge Gold and Wheaton Precious

0.65

Correlation Coefficient

Seabridge Gold  Wheaton Precious

Poor diversification

The 3 months correlation between Seabridge and Wheaton is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Seabridge Gold 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 Seabridge Gold 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 Seabridge Gold 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 Seabridge Gold i.e., Seabridge Gold and Wheaton Precious go up and down completely randomly.

Pair Corralation between Seabridge Gold and Wheaton Precious

Allowing for the 90-day total investment horizon Seabridge Gold is expected to under-perform the Wheaton Precious. In addition to that, Seabridge Gold is 1.45 times more volatile than Wheaton Precious Metals. It trades about -0.06 of its total potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.04 per unit of volatility. If you would invest  5,957  in Wheaton Precious Metals on August 31, 2024 and sell it today you would earn a total of  217.00  from holding Wheaton Precious Metals or generate 3.64% return on investment over 90 days.

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

Seabridge Gold  vs.  Wheaton Precious Metals

Seabridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seabridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Wheaton Precious Metals

Risk-Adjusted Performance

3 of 100

Very Weak

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 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.

Pair Trading with Seabridge Gold and Wheaton Precious

The main advantage of trading using opposite Seabridge Gold and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seabridge Gold 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 Seabridge Gold 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.