Correlation Between Fortuna Silver and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both Fortuna Silver 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 Fortuna Silver and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortuna Silver Mines and Sandstorm Gold Ltd, you can compare the effects of market volatilities on Fortuna Silver 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 Fortuna Silver with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortuna Silver and Sandstorm Gold.
Diversification Opportunities for Fortuna Silver and Sandstorm Gold
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fortuna and Sandstorm is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fortuna Silver 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 Fortuna Silver 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 Fortuna Silver 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 Fortuna Silver i.e., Fortuna Silver and Sandstorm Gold go up and down completely randomly.
Pair Corralation between Fortuna Silver and Sandstorm Gold
Assuming the 90 days trading horizon Fortuna Silver Mines is expected to generate 0.88 times more return on investment than Sandstorm Gold. However, Fortuna Silver Mines is 1.13 times less risky than Sandstorm Gold. It trades about -0.04 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.06 per unit of risk. If you would invest 693.00 in Fortuna Silver Mines on September 1, 2024 and sell it today you would lose (18.00) from holding Fortuna Silver Mines or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fortuna Silver Mines vs. Sandstorm Gold Ltd
Performance |
| Timeline |
| Fortuna Silver Mines |
| Sandstorm Gold |
Fortuna Silver and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortuna Silver and Sandstorm Gold
The main advantage of trading using opposite Fortuna Silver and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortuna Silver 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.| Fortuna Silver vs. First Majestic Silver | Fortuna Silver vs. Ivanhoe Energy | Fortuna Silver vs. Orezone Gold Corp | Fortuna Silver vs. Faraday Copper Corp |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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