Correlation Between Sandstorm Gold and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Sandstorm Gold and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Caledonia Mining.
Diversification Opportunities for Sandstorm Gold and Caledonia Mining
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sandstorm and Caledonia is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Caledonia Mining go up and down completely randomly.
Pair Corralation between Sandstorm Gold and Caledonia Mining
Given the investment horizon of 90 days Sandstorm Gold is expected to generate 1.06 times less return on investment than Caledonia Mining. But when comparing it to its historical volatility, Sandstorm Gold Ltd is 1.42 times less risky than Caledonia Mining. It trades about 0.03 of its potential returns per unit of risk. Caledonia Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,014 in Caledonia Mining on September 2, 2024 and sell it today you would earn a total of 40.00 from holding Caledonia Mining or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandstorm Gold Ltd vs. Caledonia Mining
Performance |
| Timeline |
| Sandstorm Gold |
| Caledonia Mining |
Sandstorm Gold and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandstorm Gold and Caledonia Mining
The main advantage of trading using opposite Sandstorm Gold and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Sandstorm Gold vs. Fortitude Gold Corp | Sandstorm Gold vs. New Gold | Sandstorm Gold vs. Galiano Gold | Sandstorm Gold vs. GoldMining |
| Caledonia Mining vs. DRDGOLD Limited ADR | Caledonia Mining vs. Galiano Gold | Caledonia Mining vs. Mastech Holdings | Caledonia Mining vs. EMX Royalty 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 Stocks Directory module to find actively traded stocks across global markets.
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