Correlation Between Sandstorm Gold and Everus Construction

Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Everus Construction 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 Everus Construction 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 Everus Construction Group, you can compare the effects of market volatilities on Sandstorm Gold and Everus Construction 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 Everus Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Everus Construction.

Diversification Opportunities for Sandstorm Gold and Everus Construction

-0.25

Correlation Coefficient

Sandstorm Gold  Everus Construction

Very good diversification

The 3 months correlation between Sandstorm and Everus is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction 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 Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Everus Construction go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Everus Construction

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to generate 0.38 times more return on investment than Everus Construction. However, Sandstorm Gold Ltd is 2.67 times less risky than Everus Construction. It trades about 0.25 of its potential returns per unit of risk. Everus Construction Group is currently generating about 0.04 per unit of risk. If you would invest  539.00  in Sandstorm Gold Ltd on October 22, 2024 and sell it today you would earn a total of  32.00  from holding Sandstorm Gold Ltd or generate 5.94% return on investment over 90 days.

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

Sandstorm Gold Ltd  vs.  Everus Construction Group

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 abnormal 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.

Everus Construction

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sandstorm Gold and Everus Construction

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

The idea behind Sandstorm Gold Ltd and Everus Construction Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.