Correlation Between Sandstorm Gold and Visteon Corp

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

Diversification Opportunities for Sandstorm Gold and Visteon Corp

0.04

Correlation Coefficient

Sandstorm Gold  Visteon Corp

Significant diversification

The 3 months correlation between Sandstorm and Visteon is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Visteon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visteon 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 Visteon Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visteon Corp has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Visteon Corp go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Visteon Corp

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to generate 1.1 times more return on investment than Visteon Corp. However, Sandstorm Gold is 1.1 times more volatile than Visteon Corp. It trades about 0.03 of its potential returns per unit of risk. Visteon Corp is currently generating about -0.07 per unit of risk. If you would invest  496.00  in Sandstorm Gold Ltd on September 20, 2024 and sell it today you would earn a total of  40.00  from holding Sandstorm Gold Ltd or generate 8.06% return on investment over 90 days.

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

Sandstorm Gold Ltd  vs.  Visteon 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 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.

Visteon Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visteon Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Sandstorm Gold and Visteon Corp

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

The idea behind Sandstorm Gold Ltd and Visteon 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.