Correlation Between Sandstorm Gold and Wabash National

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

Diversification Opportunities for Sandstorm Gold and Wabash National

-0.44

Correlation Coefficient

Sandstorm Gold  Wabash National

Very good diversification

The 3 months correlation between Sandstorm and Wabash is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Wabash National go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Wabash National

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to under-perform the Wabash National. But the stock apears to be less risky and, when comparing its historical volatility, Sandstorm Gold Ltd is 1.06 times less risky than Wabash National. The stock trades about -0.08 of its potential returns per unit of risk. The Wabash National is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,930  in Wabash National on September 20, 2024 and sell it today you would lose (220.00) from holding Wabash National or give up 11.4% of portfolio value over 90 days.

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

Sandstorm Gold Ltd  vs.  Wabash National

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.

Wabash National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wabash National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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.

Pair Trading with Sandstorm Gold and Wabash National

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

The idea behind Sandstorm Gold Ltd and Wabash National 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.