Correlation Between Newmont Goldcorp and Sandstorm Gold

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

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

Diversification Opportunities for Newmont Goldcorp and Sandstorm Gold

0.88

Correlation Coefficient

Newmont Goldcorp  Sandstorm Gold

Very poor diversification

The 3 months correlation between Newmont and Sandstorm is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Goldcorp 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 Newmont Goldcorp 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 Newmont Goldcorp 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 Newmont Goldcorp i.e., Newmont Goldcorp and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Newmont Goldcorp and Sandstorm Gold

Considering the 90-day investment horizon Newmont Goldcorp is expected to generate 2.23 times less return on investment than Sandstorm Gold. But when comparing it to its historical volatility, Newmont Goldcorp Corp is 1.06 times less risky than Sandstorm Gold. It trades about 0.03 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  578.00  in Sandstorm Gold Ltd on November 28, 2024 and sell it today you would earn a total of  39.00  from holding Sandstorm Gold Ltd or generate 6.75% return on investment over 90 days.

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

Newmont Goldcorp Corp  vs.  Sandstorm Gold Ltd

Newmont Goldcorp Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont Goldcorp Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Newmont Goldcorp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the 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 4 (%) 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 March 2025.

Pair Trading with Newmont Goldcorp and Sandstorm Gold

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

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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.