Correlation Between Visteon Corp and Sandstorm Gold

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

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

Diversification Opportunities for Visteon Corp and Sandstorm Gold

0.04

Correlation Coefficient

Visteon Corp  Sandstorm Gold

Significant diversification

The 3 months correlation between Visteon and Sandstorm is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Visteon Corp 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 Visteon Corp 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 Visteon Corp i.e., Visteon Corp and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Visteon Corp and Sandstorm Gold

Allowing for the 90-day total investment horizon Visteon Corp is expected to under-perform the Sandstorm Gold. But the stock apears to be less risky and, when comparing its historical volatility, Visteon Corp is 1.1 times less risky than Sandstorm Gold. The stock trades about -0.07 of its potential returns per unit of risk. The Sandstorm Gold Ltd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  496.00  in Sandstorm Gold Ltd on September 20, 2024 and sell it today you would earn a total of  40.00  from holding Sandstorm Gold Ltd or generate 8.06% return on investment over 90 days.

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

Visteon Corp  vs.  Sandstorm Gold Ltd

Visteon Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visteon Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 Visteon Corp and Sandstorm Gold

The main advantage of trading using opposite Visteon Corp and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visteon Corp 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 Visteon Corp 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.