Correlation Between Volaris and Sandstorm Gold

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

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

Diversification Opportunities for Volaris and Sandstorm Gold

-0.69

Correlation Coefficient

Volaris  Sandstorm Gold

Excellent diversification

The 3 months correlation between Volaris and Sandstorm is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Volaris and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Volaris 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 Volaris 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 Volaris i.e., Volaris and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Volaris and Sandstorm Gold

Given the investment horizon of 90 days Volaris is expected to under-perform the Sandstorm Gold. In addition to that, Volaris is 1.39 times more volatile than Sandstorm Gold Ltd. It trades about -0.14 of its total potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.23 per unit of volatility. If you would invest  554.00  in Sandstorm Gold Ltd on December 30, 2024 and sell it today you would earn a total of  203.00  from holding Sandstorm Gold Ltd or generate 36.64% return on investment over 90 days.

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

Volaris  vs.  Sandstorm Gold Ltd

Volaris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volaris has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sandstorm Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Sandstorm Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Volaris and Sandstorm Gold

The main advantage of trading using opposite Volaris and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volaris 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 Volaris 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.