Correlation Between Rocky Brands and Sandstorm Gold

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

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

Diversification Opportunities for Rocky Brands and Sandstorm Gold

-0.15

Correlation Coefficient

Rocky Brands  Sandstorm Gold

Good diversification

The 3 months correlation between Rocky and Sandstorm is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Brands and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Rocky Brands 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 Rocky Brands 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 Rocky Brands i.e., Rocky Brands and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Rocky Brands and Sandstorm Gold

Given the investment horizon of 90 days Rocky Brands is expected to under-perform the Sandstorm Gold. In addition to that, Rocky Brands is 1.25 times more volatile than Sandstorm Gold Ltd. It trades about -0.12 of its total potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.09 per unit of volatility. If you would invest  564.00  in Sandstorm Gold Ltd on December 11, 2024 and sell it today you would earn a total of  47.00  from holding Sandstorm Gold Ltd or generate 8.33% return on investment over 90 days.

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

Rocky Brands  vs.  Sandstorm Gold Ltd

Rocky Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rocky Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals 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

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 3 (%) 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 Rocky Brands and Sandstorm Gold

The main advantage of trading using opposite Rocky Brands and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Brands 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 Rocky Brands 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.