Correlation Between Osisko Development and Sandstorm Gold

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

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

Diversification Opportunities for Osisko Development and Sandstorm Gold

0.52

Correlation Coefficient

Osisko Development  Sandstorm Gold

Very weak diversification

The 3 months correlation between Osisko and Sandstorm is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Osisko Development 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 Osisko Development 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 Osisko Development 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 Osisko Development i.e., Osisko Development and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Osisko Development and Sandstorm Gold

Considering the 90-day investment horizon Osisko Development is expected to generate 2.16 times less return on investment than Sandstorm Gold. In addition to that, Osisko Development is 2.64 times more volatile than Sandstorm Gold Ltd. It trades about 0.01 of its total potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.03 per unit of volatility. If you would invest  560.00  in Sandstorm Gold Ltd on September 3, 2024 and sell it today you would earn a total of  19.00  from holding Sandstorm Gold Ltd or generate 3.39% return on investment over 90 days.

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

Osisko Development Corp  vs.  Sandstorm Gold Ltd

Osisko Development Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Osisko Development Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Osisko Development is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sandstorm Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Osisko Development and Sandstorm Gold

The main advantage of trading using opposite Osisko Development and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osisko Development 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 Osisko Development 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.