Correlation Between Sandstorm Gold and Avis Budget
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Avis Budget 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 Avis Budget 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 Avis Budget Group, you can compare the effects of market volatilities on Sandstorm Gold and Avis Budget 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 Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Avis Budget.
Diversification Opportunities for Sandstorm Gold and Avis Budget
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sandstorm and Avis is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Avis Budget Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avis Budget Group 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 Avis Budget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avis Budget Group has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Avis Budget go up and down completely randomly.
Pair Corralation between Sandstorm Gold and Avis Budget
Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to under-perform the Avis Budget. But the stock apears to be less risky and, when comparing its historical volatility, Sandstorm Gold Ltd is 1.46 times less risky than Avis Budget. The stock trades about -0.06 of its potential returns per unit of risk. The Avis Budget Group is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 8,544 in Avis Budget Group on August 28, 2024 and sell it today you would earn a total of 2,337 from holding Avis Budget Group or generate 27.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandstorm Gold Ltd vs. Avis Budget Group
Performance |
| Timeline |
| Sandstorm Gold |
| Avis Budget Group |
Sandstorm Gold and Avis Budget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandstorm Gold and Avis Budget
The main advantage of trading using opposite Sandstorm Gold and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Avis Budget 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 Avis Budget will offset losses from the drop in Avis Budget's long position.| Sandstorm Gold vs. Franco Nevada | Sandstorm Gold vs. Royal Gold | Sandstorm Gold vs. Alamos Gold | Sandstorm Gold vs. Seabridge Gold |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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