Correlation Between Wheaton Precious and B2Gold Corp

Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and B2Gold Corp 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 B2Gold Corp 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 B2Gold Corp, you can compare the effects of market volatilities on Wheaton Precious and B2Gold Corp 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 B2Gold Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and B2Gold Corp.

Diversification Opportunities for Wheaton Precious and B2Gold Corp

0.73

Correlation Coefficient

Wheaton Precious  B2Gold Corp

Poor diversification

The 3 months correlation between Wheaton and B2Gold is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and B2Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B2Gold Corp 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 B2Gold Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B2Gold Corp has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and B2Gold Corp go up and down completely randomly.

Pair Corralation between Wheaton Precious and B2Gold Corp

Considering the 90-day investment horizon Wheaton Precious is expected to generate 1.96 times less return on investment than B2Gold Corp. But when comparing it to its historical volatility, Wheaton Precious Metals is 1.47 times less risky than B2Gold Corp. It trades about 0.05 of its potential returns per unit of risk. B2Gold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  264.00  in B2Gold Corp on September 2, 2024 and sell it today you would earn a total of  24.00  from holding B2Gold Corp or generate 9.09% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  B2Gold Corp

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 very healthy basic indicators, Wheaton Precious is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

B2Gold Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in B2Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, B2Gold Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wheaton Precious and B2Gold Corp

The main advantage of trading using opposite Wheaton Precious and B2Gold Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, B2Gold Corp 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 B2Gold Corp will offset losses from the drop in B2Gold Corp's long position.

The idea behind Wheaton Precious Metals and B2Gold Corp 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.