Correlation Between Wheaton Precious and Getchell Gold

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

Diversification Opportunities for Wheaton Precious and Getchell Gold

0.7

Correlation Coefficient

Wheaton Precious  Getchell Gold

Poor diversification

The 3 months correlation between Wheaton and Getchell is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Getchell Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getchell Gold 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 Getchell Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getchell Gold Corp has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Getchell Gold go up and down completely randomly.

Pair Corralation between Wheaton Precious and Getchell Gold

Considering the 90-day investment horizon Wheaton Precious is expected to generate 1.9 times less return on investment than Getchell Gold. But when comparing it to its historical volatility, Wheaton Precious Metals is 4.33 times less risky than Getchell Gold. It trades about 0.05 of its potential returns per unit of risk. Getchell Gold Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  9.60  in Getchell Gold Corp on September 3, 2024 and sell it today you would lose (0.90) from holding Getchell Gold Corp or give up 9.38% of portfolio value over 90 days.

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

Wheaton Precious Metals  vs.  Getchell Gold 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.

Getchell Gold Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Getchell Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Getchell Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wheaton Precious and Getchell Gold

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

The idea behind Wheaton Precious Metals and Getchell Gold 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.