Correlation Between Sandstorm Gold and Lake Resources
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Lake Resources 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 Lake Resources 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 Lake Resources NL, you can compare the effects of market volatilities on Sandstorm Gold and Lake Resources 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 Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Lake Resources.
Diversification Opportunities for Sandstorm Gold and Lake Resources
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sandstorm and Lake is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL 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 Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Lake Resources go up and down completely randomly.
Pair Corralation between Sandstorm Gold and Lake Resources
Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to generate 0.24 times more return on investment than Lake Resources. However, Sandstorm Gold Ltd is 4.11 times less risky than Lake Resources. It trades about 0.04 of its potential returns per unit of risk. Lake Resources NL is currently generating about 0.0 per unit of risk. If you would invest 493.00 in Sandstorm Gold Ltd on August 29, 2024 and sell it today you would earn a total of 87.00 from holding Sandstorm Gold Ltd or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandstorm Gold Ltd vs. Lake Resources NL
Performance |
| Timeline |
| Sandstorm Gold |
| Lake Resources NL |
Sandstorm Gold and Lake Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandstorm Gold and Lake Resources
The main advantage of trading using opposite Sandstorm Gold and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Lake Resources 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 Lake Resources will offset losses from the drop in Lake Resources' long position.| Sandstorm Gold vs. Franco Nevada | Sandstorm Gold vs. Royal Gold | Sandstorm Gold vs. Alamos Gold | Sandstorm Gold vs. Seabridge Gold |
| Lake Resources vs. Eastman Kodak Co | Lake Resources vs. Old Dominion Freight | Lake Resources vs. Mesa Air Group | Lake Resources vs. Catalent |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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