Correlation Between Wheaton Precious and Albion Technology

Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Albion Technology 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 Albion Technology 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 Albion Technology General, you can compare the effects of market volatilities on Wheaton Precious and Albion Technology 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 Albion Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Albion Technology.

Diversification Opportunities for Wheaton Precious and Albion Technology

0.32

Correlation Coefficient

Wheaton Precious  Albion Technology

Weak diversification

The 3 months correlation between Wheaton and Albion is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Albion Technology General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albion Technology General 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 Albion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albion Technology General has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Albion Technology go up and down completely randomly.

Pair Corralation between Wheaton Precious and Albion Technology

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 2.7 times more return on investment than Albion Technology. However, Wheaton Precious is 2.7 times more volatile than Albion Technology General. It trades about 0.09 of its potential returns per unit of risk. Albion Technology General is currently generating about -0.01 per unit of risk. If you would invest  430,621  in Wheaton Precious Metals on September 3, 2024 and sell it today you would earn a total of  59,879  from holding Wheaton Precious Metals or generate 13.91% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Albion Technology General

Wheaton Precious Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals 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, Wheaton Precious exhibited solid returns over the last few months and may actually be approaching a breakup point.

Albion Technology General

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Albion Technology General has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Albion Technology 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 Albion Technology

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

The idea behind Wheaton Precious Metals and Albion Technology General 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.