Correlation Between Sandstorm Gold and Metalla Royalty

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

Diversification Opportunities for Sandstorm Gold and Metalla Royalty

0.8

Correlation Coefficient

Sandstorm Gold  Metalla Royalty

Very poor diversification

The 3 months correlation between Sandstorm and Metalla is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming 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 Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Metalla Royalty go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Metalla Royalty

Assuming the 90 days trading horizon Sandstorm Gold Ltd is expected to generate 0.98 times more return on investment than Metalla Royalty. However, Sandstorm Gold Ltd is 1.02 times less risky than Metalla Royalty. It trades about 0.06 of its potential returns per unit of risk. Metalla Royalty Streaming is currently generating about -0.1 per unit of risk. If you would invest  860.00  in Sandstorm Gold Ltd on December 1, 2024 and sell it today you would earn a total of  26.00  from holding Sandstorm Gold Ltd or generate 3.02% return on investment over 90 days.

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

Sandstorm Gold Ltd  vs.  Metalla Royalty Streaming

Sandstorm Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Sandstorm Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Metalla Royalty Streaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metalla Royalty Streaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Metalla Royalty is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sandstorm Gold and Metalla Royalty

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

The idea behind Sandstorm Gold Ltd and Metalla Royalty Streaming 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.