Correlation Between Wheaton Precious and Fidelity National

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

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

Diversification Opportunities for Wheaton Precious and Fidelity National

0.54

Correlation Coefficient

Wheaton Precious  Fidelity National

Very weak diversification

The 3 months correlation between Wheaton and Fidelity is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and Wheaton Precious 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 Wheaton Precious Metals are associated (or correlated) with Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Fidelity National go up and down completely randomly.

Pair Corralation between Wheaton Precious and Fidelity National

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 2.5 times more return on investment than Fidelity National. However, Wheaton Precious is 2.5 times more volatile than Fidelity National Information. It trades about 0.04 of its potential returns per unit of risk. Fidelity National Information is currently generating about 0.02 per unit of risk. If you would invest  471,490  in Wheaton Precious Metals on September 13, 2024 and sell it today you would earn a total of  19,510  from holding Wheaton Precious Metals or generate 4.14% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Fidelity National Information

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 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.

Fidelity National

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Information are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidelity National is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wheaton Precious and Fidelity National

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

The idea behind Wheaton Precious Metals and Fidelity National Information 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.