Correlation Between Wheaton Precious and SSR Mining

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

Diversification Opportunities for Wheaton Precious and SSR Mining

0.17

Correlation Coefficient

Wheaton Precious  SSR Mining

Average diversification

The 3 months correlation between Wheaton and SSR is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and SSR Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSR Mining 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 SSR Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSR Mining has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and SSR Mining go up and down completely randomly.

Pair Corralation between Wheaton Precious and SSR Mining

Considering the 90-day investment horizon Wheaton Precious Metals is expected to generate 0.6 times more return on investment than SSR Mining. However, Wheaton Precious Metals is 1.67 times less risky than SSR Mining. It trades about 0.04 of its potential returns per unit of risk. SSR Mining is currently generating about -0.05 per unit of risk. If you would invest  3,868  in Wheaton Precious Metals on February 3, 2024 and sell it today you would earn a total of  1,435  from holding Wheaton Precious Metals or generate 37.1% 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.  SSR Mining

Wheaton Precious Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Wheaton Precious displayed solid returns over the last few months and may actually be approaching a breakup point.

SSR Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSR Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Wheaton Precious and SSR Mining

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

The idea behind Wheaton Precious Metals and SSR Mining 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.