Correlation Between Sandstorm Gold and Cerrado Gold
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Cerrado 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 Sandstorm Gold and Cerrado Gold 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 Cerrado Gold, you can compare the effects of market volatilities on Sandstorm Gold and Cerrado 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 Sandstorm Gold with a short position of Cerrado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Cerrado Gold.
Diversification Opportunities for Sandstorm Gold and Cerrado Gold
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sandstorm and Cerrado is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Cerrado Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerrado Gold 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 Cerrado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerrado Gold has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Cerrado Gold go up and down completely randomly.
Pair Corralation between Sandstorm Gold and Cerrado Gold
Given the investment horizon of 90 days Sandstorm Gold is expected to generate 3.1 times less return on investment than Cerrado Gold. But when comparing it to its historical volatility, Sandstorm Gold Ltd is 5.06 times less risky than Cerrado Gold. It trades about 0.04 of its potential returns per unit of risk. Cerrado Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 49.00 in Cerrado Gold on September 2, 2024 and sell it today you would lose (23.00) from holding Cerrado Gold or give up 46.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sandstorm Gold Ltd vs. Cerrado Gold
Performance |
| Timeline |
| Sandstorm Gold |
| Cerrado Gold |
Sandstorm Gold and Cerrado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandstorm Gold and Cerrado Gold
The main advantage of trading using opposite Sandstorm Gold and Cerrado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Cerrado 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 Cerrado Gold will offset losses from the drop in Cerrado Gold's long position.| Sandstorm Gold vs. Fortitude Gold Corp | Sandstorm Gold vs. New Gold | Sandstorm Gold vs. Galiano Gold | Sandstorm Gold vs. GoldMining |
| Cerrado Gold vs. Aurion Resources | Cerrado Gold vs. Rio2 Limited | Cerrado Gold vs. Palamina Corp | Cerrado Gold vs. Grande Portage Resources |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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