Correlation Between Sandstorm Gold and ALLTEL

Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and ALLTEL 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 ALLTEL 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 ALLTEL P 7875, you can compare the effects of market volatilities on Sandstorm Gold and ALLTEL 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 ALLTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and ALLTEL.

Diversification Opportunities for Sandstorm Gold and ALLTEL

0.15

Correlation Coefficient

Sandstorm Gold  ALLTEL

Average diversification

The 3 months correlation between Sandstorm and ALLTEL is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and ALLTEL P 7875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLTEL P 7875 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 ALLTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLTEL P 7875 has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and ALLTEL go up and down completely randomly.

Pair Corralation between Sandstorm Gold and ALLTEL

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to generate 0.72 times more return on investment than ALLTEL. However, Sandstorm Gold Ltd is 1.38 times less risky than ALLTEL. It trades about 0.25 of its potential returns per unit of risk. ALLTEL P 7875 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 Together
Strength	Insignificant
Accuracy	72.22%
Values	Daily Returns

Sandstorm Gold Ltd  vs.  ALLTEL P 7875

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.

ALLTEL P 7875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLTEL P 7875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLTEL 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 ALLTEL

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

The idea behind Sandstorm Gold Ltd and ALLTEL P 7875 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.