Correlation Between Awilco Drilling and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both Awilco Drilling 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 Awilco Drilling and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Awilco Drilling PLC and Sandstorm Gold Ltd, you can compare the effects of market volatilities on Awilco Drilling 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 Awilco Drilling with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and Sandstorm Gold.
Diversification Opportunities for Awilco Drilling and Sandstorm Gold
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Awilco and Sandstorm is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Awilco Drilling 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 Awilco Drilling PLC 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 Awilco Drilling i.e., Awilco Drilling and Sandstorm Gold go up and down completely randomly.
Pair Corralation between Awilco Drilling and Sandstorm Gold
Assuming the 90 days horizon Awilco Drilling PLC is expected to generate 23.11 times more return on investment than Sandstorm Gold. However, Awilco Drilling is 23.11 times more volatile than Sandstorm Gold Ltd. It trades about 0.06 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.01 per unit of risk. If you would invest 1,000.00 in Awilco Drilling PLC on August 31, 2024 and sell it today you would lose (808.00) from holding Awilco Drilling PLC or give up 80.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Awilco Drilling PLC vs. Sandstorm Gold Ltd
Performance |
| Timeline |
| Awilco Drilling PLC |
| Sandstorm Gold |
Awilco Drilling and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Awilco Drilling and Sandstorm Gold
The main advantage of trading using opposite Awilco Drilling and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awilco Drilling 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.| Awilco Drilling vs. Oasis Hotel Resort | Awilco Drilling vs. Dine Brands Global | Awilco Drilling vs. Park Hotels Resorts | Awilco Drilling vs. Insteel Industries |
| Sandstorm Gold vs. Franco Nevada | Sandstorm Gold vs. Alamos Gold | Sandstorm Gold vs. Seabridge Gold | Sandstorm Gold vs. Wheaton Precious Metals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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