Correlation Between Sandstorm Gold and Awilco Drilling
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Awilco Drilling 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 Sandstorm Gold and Awilco Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandstorm Gold Ltd and Awilco Drilling PLC, you can compare the effects of market volatilities on Sandstorm Gold and Awilco Drilling 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 Sandstorm Gold with a short position of Awilco Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Awilco Drilling.
Diversification Opportunities for Sandstorm Gold and Awilco Drilling
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sandstorm and Awilco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC and Sandstorm 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 Sandstorm Gold Ltd are associated (or correlated) with Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Awilco Drilling go up and down completely randomly.
Pair Corralation between Sandstorm Gold and Awilco Drilling
Given the investment horizon of 90 days Sandstorm Gold is expected to generate 133.87 times less return on investment than Awilco Drilling. But when comparing it to its historical volatility, Sandstorm Gold Ltd is 23.11 times less risky than Awilco Drilling. It trades about 0.01 of its potential returns per unit of risk. Awilco Drilling PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 |
Sandstorm Gold Ltd vs. Awilco Drilling PLC
Performance |
| Timeline |
| Sandstorm Gold |
| Awilco Drilling PLC |
Sandstorm Gold and Awilco Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandstorm Gold and Awilco Drilling
The main advantage of trading using opposite Sandstorm Gold and Awilco Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Awilco Drilling 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 Awilco Drilling will offset losses from the drop in Awilco Drilling's long position.| Sandstorm Gold vs. Franco Nevada | Sandstorm Gold vs. Alamos Gold | Sandstorm Gold vs. Seabridge Gold | Sandstorm Gold vs. Wheaton Precious Metals |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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