Correlation Between Sandstorm Gold and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Compania Cervecerias 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 Compania Cervecerias 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 Compania Cervecerias Unidas, you can compare the effects of market volatilities on Sandstorm Gold and Compania Cervecerias 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 Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Compania Cervecerias.
Diversification Opportunities for Sandstorm Gold and Compania Cervecerias
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sandstorm and Compania is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Compania Cervecerias go up and down completely randomly.
Pair Corralation between Sandstorm Gold and Compania Cervecerias
Given the investment horizon of 90 days Sandstorm Gold is expected to generate 1.37 times less return on investment than Compania Cervecerias. In addition to that, Sandstorm Gold is 2.22 times more volatile than Compania Cervecerias Unidas. It trades about 0.14 of its total potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.43 per unit of volatility. If you would invest 1,083 in Compania Cervecerias Unidas on September 14, 2024 and sell it today you would earn a total of 100.00 from holding Compania Cervecerias Unidas or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sandstorm Gold Ltd vs. Compania Cervecerias Unidas
Performance |
| Timeline |
| Sandstorm Gold |
| Compania Cervecerias |
Sandstorm Gold and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandstorm Gold and Compania Cervecerias
The main advantage of trading using opposite Sandstorm Gold and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.| Sandstorm Gold vs. Fortitude Gold Corp | Sandstorm Gold vs. New Gold | Sandstorm Gold vs. Galiano Gold | Sandstorm Gold vs. GoldMining |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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