Correlation Between MACOM Technology and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both MACOM Technology 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 MACOM Technology and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Sandstorm Gold Ltd, you can compare the effects of market volatilities on MACOM Technology 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 MACOM Technology with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Sandstorm Gold.
Diversification Opportunities for MACOM Technology and Sandstorm Gold
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between MACOM and Sandstorm is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Sandstorm Gold go up and down completely randomly.
Pair Corralation between MACOM Technology and Sandstorm Gold
Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 1.29 times more return on investment than Sandstorm Gold. However, MACOM Technology is 1.29 times more volatile than Sandstorm Gold Ltd. It trades about 0.23 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.07 per unit of risk. If you would invest 11,265 in MACOM Technology Solutions on September 2, 2024 and sell it today you would earn a total of 2,017 from holding MACOM Technology Solutions or generate 17.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Sandstorm Gold Ltd
Performance |
| Timeline |
| MACOM Technology Sol |
| Sandstorm Gold |
MACOM Technology and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Sandstorm Gold
The main advantage of trading using opposite MACOM Technology and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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.| MACOM Technology vs. NXP Semiconductors NV | MACOM Technology vs. GSI Technology | MACOM Technology vs. MaxLinear | MACOM Technology vs. Texas Instruments Incorporated |
| Sandstorm Gold vs. Fortitude Gold Corp | Sandstorm Gold vs. New Gold | Sandstorm Gold vs. Galiano Gold | Sandstorm Gold vs. GoldMining |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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