Correlation Between Sandstorm Gold and Minerals Technologies

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

Diversification Opportunities for Sandstorm Gold and Minerals Technologies

-0.25
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Sandstorm Gold and Minerals Technologies

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to generate 1.52 times more return on investment than Minerals Technologies. However, Sandstorm Gold is 1.52 times more volatile than Minerals Technologies. It trades about -0.13 of its potential returns per unit of risk. Minerals Technologies is currently generating about -0.22 per unit of risk. If you would invest  579.00  in Sandstorm Gold Ltd on September 29, 2024 and sell it today you would lose (32.00) from holding Sandstorm Gold Ltd or give up 5.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sandstorm Gold Ltd  vs.  Minerals Technologies

 Performance 
       Timeline  
Sandstorm Gold 

Risk-Adjusted Performance

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Weak
 
Strong
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.
Minerals Technologies 

Risk-Adjusted Performance

0 of 100

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

Sandstorm Gold and Minerals Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sandstorm Gold and Minerals Technologies

The main advantage of trading using opposite Sandstorm Gold and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.
The idea behind Sandstorm Gold Ltd and Minerals Technologies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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