Correlation Between National Beverage and Sandstorm Gold

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

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

Diversification Opportunities for National Beverage and Sandstorm Gold

-0.6

Correlation Coefficient

National Beverage  Sandstorm Gold

Excellent diversification

The 3 months correlation between National and Sandstorm is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Sandstorm Gold go up and down completely randomly.

Pair Corralation between National Beverage and Sandstorm Gold

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Sandstorm Gold. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.89 times less risky than Sandstorm Gold. The stock trades about -0.03 of its potential returns per unit of risk. The Sandstorm Gold Ltd is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  601.00  in Sandstorm Gold Ltd on December 5, 2024 and sell it today you would earn a total of  38.00  from holding Sandstorm Gold Ltd or generate 6.32% return on investment over 90 days.

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

National Beverage Corp  vs.  Sandstorm Gold Ltd

National Beverage Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sandstorm Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Sandstorm Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with National Beverage and Sandstorm Gold

The main advantage of trading using opposite National Beverage and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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 National Beverage Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.