Correlation Between Wheaton Precious and Gaming Realms

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

Diversification Opportunities for Wheaton Precious and Gaming Realms

-0.5

Correlation Coefficient

Wheaton Precious  Gaming Realms

Very good diversification

The 3 months correlation between Wheaton and Gaming is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Gaming Realms plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Realms 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 Gaming Realms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Realms plc has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Gaming Realms go up and down completely randomly.

Pair Corralation between Wheaton Precious and Gaming Realms

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.86 times more return on investment than Gaming Realms. However, Wheaton Precious Metals is 1.16 times less risky than Gaming Realms. It trades about -0.07 of its potential returns per unit of risk. Gaming Realms plc is currently generating about -0.1 per unit of risk. If you would invest  483,950  in Wheaton Precious Metals on September 20, 2024 and sell it today you would lose (12,950) from holding Wheaton Precious Metals or give up 2.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Wheaton Precious Metals  vs.  Gaming Realms plc

Wheaton Precious Metals

Risk-Adjusted Performance

0 of 100

Very 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.

Gaming Realms plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaming Realms plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Wheaton Precious and Gaming Realms

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

The idea behind Wheaton Precious Metals and Gaming Realms 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.