Correlation Between Compass Digital and Sandstorm Gold

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

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

Diversification Opportunities for Compass Digital and Sandstorm Gold

0.0

Correlation Coefficient

Compass Digital  Sandstorm Gold

Pay attention - limited upside

The 3 months correlation between Compass and Sandstorm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compass Digital Acquisition and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Compass Digital 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 Compass Digital Acquisition 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 Compass Digital i.e., Compass Digital and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Compass Digital and Sandstorm Gold

If you would invest  546.00  in Sandstorm Gold Ltd on December 27, 2024 and sell it today you would earn a total of  219.00  from holding Sandstorm Gold Ltd or generate 40.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Compass Digital Acquisition  vs.  Sandstorm Gold Ltd

Compass Digital Acqu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compass Digital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Compass Digital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated 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 19 (%) 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 Compass Digital and Sandstorm Gold

The main advantage of trading using opposite Compass Digital and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Digital 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 Compass Digital Acquisition 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.