Correlation Between First Majestic and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both First Majestic 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 First Majestic and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Majestic Silver and Sandstorm Gold Ltd, you can compare the effects of market volatilities on First Majestic 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 First Majestic with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Sandstorm Gold.
Diversification Opportunities for First Majestic and Sandstorm Gold
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Sandstorm is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and First Majestic 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 First Majestic Silver 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 First Majestic i.e., First Majestic and Sandstorm Gold go up and down completely randomly.
Pair Corralation between First Majestic and Sandstorm Gold
Assuming the 90 days horizon First Majestic Silver is expected to generate 2.44 times more return on investment than Sandstorm Gold. However, First Majestic is 2.44 times more volatile than Sandstorm Gold Ltd. It trades about 0.13 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.27 per unit of risk. If you would invest 785.00 in First Majestic Silver on October 21, 2024 and sell it today you would earn a total of 59.00 from holding First Majestic Silver or generate 7.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Sandstorm Gold Ltd
Performance |
| Timeline |
| First Majestic Silver |
| Sandstorm Gold |
First Majestic and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Sandstorm Gold
The main advantage of trading using opposite First Majestic and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic 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.| First Majestic vs. Computer Modelling Group | First Majestic vs. Calibre Mining Corp | First Majestic vs. Mako Mining Corp | First Majestic vs. Cogeco Communications |
| Sandstorm Gold vs. Osisko Gold Ro | Sandstorm Gold vs. Wheaton Precious Metals | Sandstorm Gold vs. Seabridge Gold | Sandstorm Gold vs. MAG Silver Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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