Correlation Between Sandstorm Gold and Uranium Energy

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

Diversification Opportunities for Sandstorm Gold and Uranium Energy

-0.67

Correlation Coefficient

Sandstorm Gold  Uranium Energy

Excellent diversification

The 3 months correlation between Sandstorm and Uranium is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Uranium Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uranium Energy 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 Uranium Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uranium Energy Corp has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Uranium Energy go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Uranium Energy

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to generate 0.55 times more return on investment than Uranium Energy. However, Sandstorm Gold Ltd is 1.81 times less risky than Uranium Energy. It trades about 0.23 of its potential returns per unit of risk. Uranium Energy Corp is currently generating about -0.1 per unit of risk. If you would invest  554.00  in Sandstorm Gold Ltd on December 30, 2024 and sell it today you would earn a total of  203.00  from holding Sandstorm Gold Ltd or generate 36.64% return on investment over 90 days.

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

Sandstorm Gold Ltd  vs.  Uranium Energy Corp

Sandstorm Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Sandstorm Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Uranium Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Uranium Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sandstorm Gold and Uranium Energy

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

The idea behind Sandstorm Gold Ltd and Uranium Energy 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.