Correlation Between Wheaton Precious and Argo Blockchain

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

Diversification Opportunities for Wheaton Precious and Argo Blockchain

0.14

Correlation Coefficient

Wheaton Precious  Argo Blockchain

Average diversification

The 3 months correlation between Wheaton and Argo is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Argo Blockchain PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Blockchain PLC 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 Argo Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Blockchain PLC has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Argo Blockchain go up and down completely randomly.

Pair Corralation between Wheaton Precious and Argo Blockchain

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.4 times more return on investment than Argo Blockchain. However, Wheaton Precious Metals is 2.48 times less risky than Argo Blockchain. It trades about 0.04 of its potential returns per unit of risk. Argo Blockchain PLC is currently generating about -0.04 per unit of risk. If you would invest  405,873  in Wheaton Precious Metals on September 29, 2024 and sell it today you would earn a total of  46,127  from holding Wheaton Precious Metals or generate 11.36% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Argo Blockchain PLC

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.

Argo Blockchain PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argo Blockchain PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Wheaton Precious and Argo Blockchain

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

The idea behind Wheaton Precious Metals and Argo Blockchain PLC 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.