Correlation Between Wesdome Gold and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both Wesdome Gold 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 Wesdome Gold and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wesdome Gold Mines and Sandstorm Gold Ltd, you can compare the effects of market volatilities on Wesdome Gold 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 Wesdome Gold with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesdome Gold and Sandstorm Gold.
Diversification Opportunities for Wesdome Gold and Sandstorm Gold
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wesdome and Sandstorm is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Wesdome 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 Wesdome Gold Mines 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 Wesdome Gold i.e., Wesdome Gold and Sandstorm Gold go up and down completely randomly.
Pair Corralation between Wesdome Gold and Sandstorm Gold
Assuming the 90 days horizon Wesdome Gold Mines is expected to generate 1.04 times more return on investment than Sandstorm Gold. However, Wesdome Gold is 1.04 times more volatile than Sandstorm Gold Ltd. It trades about 0.11 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.08 per unit of risk. If you would invest 873.00 in Wesdome Gold Mines on December 1, 2024 and sell it today you would earn a total of 133.00 from holding Wesdome Gold Mines or generate 15.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Wesdome Gold Mines vs. Sandstorm Gold Ltd
Performance |
Timeline |
Wesdome Gold Mines |
Sandstorm Gold |
Wesdome Gold and Sandstorm Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wesdome Gold and Sandstorm Gold
The main advantage of trading using opposite Wesdome Gold and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesdome Gold 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.Wesdome Gold vs. Victoria Gold Corp | Wesdome Gold vs. Cassiar Gold Corp | Wesdome Gold vs. Liberty Gold Corp | Wesdome Gold vs. I 80 Gold Corp |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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