Correlation Between Sandstorm Gold and 20914UAF3

Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and 20914UAF3 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 20914UAF3 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 US20914UAF30, you can compare the effects of market volatilities on Sandstorm Gold and 20914UAF3 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 20914UAF3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and 20914UAF3.

Diversification Opportunities for Sandstorm Gold and 20914UAF3

-0.33

Correlation Coefficient

Sandstorm Gold  20914UAF3

Very good diversification

The 3 months correlation between Sandstorm and 20914UAF3 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and US20914UAF30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US20914UAF30 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 20914UAF3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US20914UAF30 has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and 20914UAF3 go up and down completely randomly.

Pair Corralation between Sandstorm Gold and 20914UAF3

Given the investment horizon of 90 days Sandstorm Gold is expected to generate 1.89 times less return on investment than 20914UAF3. But when comparing it to its historical volatility, Sandstorm Gold Ltd is 1.13 times less risky than 20914UAF3. It trades about 0.05 of its potential returns per unit of risk. US20914UAF30 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,997  in US20914UAF30 on September 17, 2024 and sell it today you would earn a total of  203.00  from holding US20914UAF30 or generate 2.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Sandstorm Gold Ltd  vs.  US20914UAF30

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 unfluctuating 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.

US20914UAF30

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in US20914UAF30 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 20914UAF3 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 20914UAF3

The main advantage of trading using opposite Sandstorm Gold and 20914UAF3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, 20914UAF3 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 20914UAF3 will offset losses from the drop in 20914UAF3's long position.

The idea behind Sandstorm Gold Ltd and US20914UAF30 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.