Correlation Between DNBNO and Sandstorm Gold

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

By analyzing existing cross correlation between DNBNO 1535 25 MAY 27 and Sandstorm Gold Ltd, you can compare the effects of market volatilities on DNBNO 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 DNBNO with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of DNBNO and Sandstorm Gold.

Diversification Opportunities for DNBNO and Sandstorm Gold

-0.02

Correlation Coefficient

DNBNO  Sandstorm Gold

Good diversification

The 3 months correlation between DNBNO and Sandstorm is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding DNBNO 1535 25 MAY 27 and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and DNBNO 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 DNBNO 1535 25 MAY 27 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 DNBNO i.e., DNBNO and Sandstorm Gold go up and down completely randomly.

Pair Corralation between DNBNO and Sandstorm Gold

Assuming the 90 days trading horizon DNBNO 1535 25 MAY 27 is expected to under-perform the Sandstorm Gold. But the bond apears to be less risky and, when comparing its historical volatility, DNBNO 1535 25 MAY 27 is 1.84 times less risky than Sandstorm Gold. The bond trades about -0.19 of its potential returns per unit of risk. The Sandstorm Gold Ltd is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  623.00  in Sandstorm Gold Ltd on September 14, 2024 and sell it today you would lose (54.00) from holding Sandstorm Gold Ltd or give up 8.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

DNBNO 1535 25 MAY 27  vs.  Sandstorm Gold Ltd

DNBNO 1535 25

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DNBNO 1535 25 MAY 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for DNBNO 1535 25 MAY 27 investors.

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.

Pair Trading with DNBNO and Sandstorm Gold

The main advantage of trading using opposite DNBNO and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DNBNO 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 DNBNO 1535 25 MAY 27 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.