Correlation Between SilverCrest Metals and Sandstorm Gold

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

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

Diversification Opportunities for SilverCrest Metals and Sandstorm Gold

0.61

Correlation Coefficient

SilverCrest Metals  Sandstorm Gold

Poor diversification

The 3 months correlation between SilverCrest and Sandstorm is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SilverCrest Metals and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and SilverCrest Metals 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 SilverCrest Metals 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 SilverCrest Metals i.e., SilverCrest Metals and Sandstorm Gold go up and down completely randomly.

Pair Corralation between SilverCrest Metals and Sandstorm Gold

Assuming the 90 days trading horizon SilverCrest Metals is expected to generate 1.64 times more return on investment than Sandstorm Gold. However, SilverCrest Metals is 1.64 times more volatile than Sandstorm Gold Ltd. It trades about 0.15 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.06 per unit of risk. If you would invest  1,065  in SilverCrest Metals on August 31, 2024 and sell it today you would earn a total of  361.00  from holding SilverCrest Metals or generate 33.9% return on investment over 90 days.

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

SilverCrest Metals  vs.  Sandstorm Gold Ltd

SilverCrest Metals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SilverCrest Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, SilverCrest Metals displayed solid returns over the last few months and may actually be approaching a breakup point.

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 December 2024.

Pair Trading with SilverCrest Metals and Sandstorm Gold

The main advantage of trading using opposite SilverCrest Metals and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SilverCrest Metals 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 SilverCrest Metals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.