Correlation Between Globalfoundries and Sandstorm Gold

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

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

Diversification Opportunities for Globalfoundries and Sandstorm Gold

-0.49

Correlation Coefficient

Globalfoundries  Sandstorm Gold

Very good diversification

The 3 months correlation between Globalfoundries and Sandstorm is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Globalfoundries 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 Globalfoundries 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 Globalfoundries i.e., Globalfoundries and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Globalfoundries and Sandstorm Gold

Considering the 90-day investment horizon Globalfoundries is expected to under-perform the Sandstorm Gold. But the stock apears to be less risky and, when comparing its historical volatility, Globalfoundries is 1.07 times less risky than Sandstorm Gold. The stock trades about -0.12 of its potential returns per unit of risk. The Sandstorm Gold Ltd is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  562.00  in Sandstorm Gold Ltd on October 3, 2024 and sell it today you would lose (4.00) from holding Sandstorm Gold Ltd or give up 0.71% of portfolio value over 90 days.

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

Globalfoundries  vs.  Sandstorm Gold Ltd

Globalfoundries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Globalfoundries unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 rather sound basic indicators, Sandstorm Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Globalfoundries and Sandstorm Gold

The main advantage of trading using opposite Globalfoundries and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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 Globalfoundries 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..