Correlation Between Supermarket Income and Wheaton Precious

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

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

Diversification Opportunities for Supermarket Income and Wheaton Precious

0.09

Correlation Coefficient

Supermarket Income  Wheaton Precious

Significant diversification

The 3 months correlation between Supermarket and Wheaton is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT 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 Supermarket Income 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 Supermarket Income REIT 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 Supermarket Income i.e., Supermarket Income and Wheaton Precious go up and down completely randomly.

Pair Corralation between Supermarket Income and Wheaton Precious

Assuming the 90 days trading horizon Supermarket Income REIT is expected to under-perform the Wheaton Precious. But the stock apears to be less risky and, when comparing its historical volatility, Supermarket Income REIT is 2.22 times less risky than Wheaton Precious. The stock trades about -0.11 of its potential returns per unit of risk. The Wheaton Precious Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  478,468  in Wheaton Precious Metals on September 29, 2024 and sell it today you would lose (26,468) from holding Wheaton Precious Metals or give up 5.53% of portfolio value over 90 days.

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

Supermarket Income REIT  vs.  Wheaton Precious Metals

Supermarket Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supermarket Income REIT 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

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 Supermarket Income and Wheaton Precious

The main advantage of trading using opposite Supermarket Income and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income 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 Supermarket Income REIT 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.