Correlation Between Sandstorm Gold and Independence Gold
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Independence 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 Independence 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 Independence Gold Corp, you can compare the effects of market volatilities on Sandstorm Gold and Independence 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 Independence Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Independence Gold.
Diversification Opportunities for Sandstorm Gold and Independence Gold
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandstorm and Independence is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Independence Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Gold Corp 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 Independence Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Gold Corp has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Independence Gold go up and down completely randomly.
Pair Corralation between Sandstorm Gold and Independence Gold
Given the investment horizon of 90 days Sandstorm Gold is expected to generate 114.2 times less return on investment than Independence Gold. But when comparing it to its historical volatility, Sandstorm Gold Ltd is 22.43 times less risky than Independence Gold. It trades about 0.01 of its potential returns per unit of risk. Independence Gold Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Independence Gold Corp on August 31, 2024 and sell it today you would earn a total of 5.00 from holding Independence Gold Corp or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandstorm Gold Ltd vs. Independence Gold Corp
Performance |
| Timeline |
| Sandstorm Gold |
| Independence Gold Corp |
Sandstorm Gold and Independence Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandstorm Gold and Independence Gold
The main advantage of trading using opposite Sandstorm Gold and Independence Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Independence 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 Independence Gold will offset losses from the drop in Independence Gold's long position.| Sandstorm Gold vs. Franco Nevada | Sandstorm Gold vs. Alamos Gold | Sandstorm Gold vs. Seabridge Gold | Sandstorm Gold vs. Wheaton Precious Metals |
| Independence Gold vs. South32 Limited | Independence Gold vs. NioCorp Developments Ltd | Independence Gold vs. HUMANA INC | Independence Gold vs. SCOR PK |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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