Correlation Between Sandstorm Gold and Seabridge Gold

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

Diversification Opportunities for Sandstorm Gold and Seabridge Gold

-0.07

Correlation Coefficient

Sandstorm Gold  Seabridge Gold

Good diversification

The 3 months correlation between Sandstorm and Seabridge is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Seabridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seabridge Gold 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 Seabridge Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seabridge Gold has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Seabridge Gold go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Seabridge Gold

Assuming the 90 days trading horizon Sandstorm Gold Ltd is expected to generate 0.64 times more return on investment than Seabridge Gold. However, Sandstorm Gold Ltd is 1.56 times less risky than Seabridge Gold. It trades about 0.11 of its potential returns per unit of risk. Seabridge Gold is currently generating about -0.11 per unit of risk. If you would invest  811.00  in Sandstorm Gold Ltd on November 29, 2024 and sell it today you would earn a total of  112.00  from holding Sandstorm Gold Ltd or generate 13.81% return on investment over 90 days.

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

Sandstorm Gold Ltd  vs.  Seabridge Gold

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 9 (%) 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.

Seabridge Gold

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sandstorm Gold and Seabridge Gold

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

The idea behind Sandstorm Gold Ltd and Seabridge Gold 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.