Correlation Between Air Lease and Sandstorm Gold

Can any of the company-specific risk be diversified away by investing in both Air Lease and Sandstorm 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 Air Lease and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Lease and Sandstorm Gold Ltd, you can compare the effects of market volatilities on Air Lease and Sandstorm 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 Air Lease with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Sandstorm Gold.

Diversification Opportunities for Air Lease and Sandstorm Gold

0.0

Correlation Coefficient

Air Lease  Sandstorm Gold

Pay attention - limited upside

The 3 months correlation between Air and Sandstorm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Air Lease 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 Air Lease are associated (or correlated) with Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Air Lease i.e., Air Lease and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Air Lease and Sandstorm Gold

Allowing for the 90-day total investment horizon Air Lease is expected to generate 15.16 times less return on investment than Sandstorm Gold. But when comparing it to its historical volatility, Air Lease is 1.08 times less risky than Sandstorm Gold. It trades about 0.02 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  546.00  in Sandstorm Gold Ltd on December 27, 2024 and sell it today you would earn a total of  189.00  from holding Sandstorm Gold Ltd or generate 34.62% return on investment over 90 days.

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

Air Lease  vs.  Sandstorm Gold Ltd

Air Lease

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Air Lease is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Sandstorm Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Sandstorm Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Lease and Sandstorm Gold

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

The idea behind Air Lease and Sandstorm Gold Ltd 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.