Correlation Between Sandstorm Gold and Air Lease

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

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

Diversification Opportunities for Sandstorm Gold and Air Lease

-0.52

Correlation Coefficient

Sandstorm Gold  Air Lease

Excellent diversification

The 3 months correlation between Sandstorm and Air is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Sandstorm Gold 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 Sandstorm Gold Ltd are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Air Lease go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Air Lease

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to generate 1.41 times more return on investment than Air Lease. However, Sandstorm Gold is 1.41 times more volatile than Air Lease. It trades about 0.14 of its potential returns per unit of risk. Air Lease is currently generating about 0.01 per unit of risk. If you would invest  537.00  in Sandstorm Gold Ltd on September 14, 2024 and sell it today you would earn a total of  32.00  from holding Sandstorm Gold Ltd or generate 5.96% return on investment over 90 days.

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

Sandstorm Gold Ltd  vs.  Air Lease

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 latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Air Lease

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sandstorm Gold and Air Lease

The main advantage of trading using opposite Sandstorm Gold and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.

The idea behind Sandstorm Gold Ltd and Air Lease 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.