Correlation Between Aptiv PLC and Sandstorm Gold

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

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

Diversification Opportunities for Aptiv PLC and Sandstorm Gold

0.54

Correlation Coefficient

Aptiv PLC  Sandstorm Gold

Very weak diversification

The 3 months correlation between Aptiv and Sandstorm is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Aptiv PLC 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 Aptiv PLC 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 Aptiv PLC i.e., Aptiv PLC and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Aptiv PLC and Sandstorm Gold

Given the investment horizon of 90 days Aptiv PLC is expected to generate 0.81 times more return on investment than Sandstorm Gold. However, Aptiv PLC is 1.23 times less risky than Sandstorm Gold. It trades about 0.25 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.12 per unit of risk. If you would invest  5,211  in Aptiv PLC on September 20, 2024 and sell it today you would earn a total of  465.00  from holding Aptiv PLC or generate 8.92% return on investment over 90 days.

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

Aptiv PLC  vs.  Sandstorm Gold Ltd

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptiv PLC 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 fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sandstorm Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandstorm Gold Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic 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 Aptiv PLC and Sandstorm Gold

The main advantage of trading using opposite Aptiv PLC and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC 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 Aptiv PLC 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.