Correlation Between Seabridge Gold and Sandstorm Gold

Can any of the company-specific risk be diversified away by investing in both Seabridge Gold and Sandstorm Gold 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 Seabridge Gold and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seabridge Gold and Sandstorm Gold Ltd, you can compare the effects of market volatilities on Seabridge Gold and Sandstorm Gold 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 Seabridge Gold with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seabridge Gold and Sandstorm Gold.

Diversification Opportunities for Seabridge Gold and Sandstorm Gold

0.65

Correlation Coefficient

Seabridge Gold  Sandstorm Gold

Poor diversification

The 3 months correlation between Seabridge and Sandstorm is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Seabridge Gold and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Seabridge 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 Seabridge Gold are associated (or correlated) with Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Seabridge Gold i.e., Seabridge Gold and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Seabridge Gold and Sandstorm Gold

Assuming the 90 days trading horizon Seabridge Gold is expected to under-perform the Sandstorm Gold. In addition to that, Seabridge Gold is 1.24 times more volatile than Sandstorm Gold Ltd. It trades about -0.04 of its total potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.06 per unit of volatility. If you would invest  759.00  in Sandstorm Gold Ltd on September 2, 2024 and sell it today you would earn a total of  53.00  from holding Sandstorm Gold Ltd or generate 6.98% return on investment over 90 days.

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

Seabridge Gold  vs.  Sandstorm Gold Ltd

Seabridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seabridge Gold 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Sandstorm Gold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Sandstorm Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Seabridge Gold and Sandstorm Gold

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

The idea behind Seabridge Gold and Sandstorm Gold Ltd 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.