Correlation Between Sandstorm Gold and National Beverage

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

Diversification Opportunities for Sandstorm Gold and National Beverage

-0.49

Correlation Coefficient

Sandstorm Gold  National Beverage

Very good diversification

The 3 months correlation between Sandstorm and National is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and National Beverage go up and down completely randomly.

Pair Corralation between Sandstorm Gold and National Beverage

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to generate 1.29 times more return on investment than National Beverage. However, Sandstorm Gold is 1.29 times more volatile than National Beverage Corp. It trades about 0.02 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.01 per unit of risk. If you would invest  513.00  in Sandstorm Gold Ltd on September 18, 2024 and sell it today you would earn a total of  47.00  from holding Sandstorm Gold Ltd or generate 9.16% 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.  National Beverage Corp

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 rather sound basic indicators, Sandstorm Gold is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

National Beverage Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sandstorm Gold and National Beverage

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

The idea behind Sandstorm Gold Ltd and National Beverage Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.