Correlation Between Sandstorm Gold and Royal Gold
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Royal 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 Royal 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 Royal Gold, you can compare the effects of market volatilities on Sandstorm Gold and Royal 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 Royal Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Royal Gold.
Diversification Opportunities for Sandstorm Gold and Royal Gold
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandstorm and Royal is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Royal Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal 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 Royal Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Gold has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Royal Gold go up and down completely randomly.
Pair Corralation between Sandstorm Gold and Royal Gold
Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to under-perform the Royal Gold. In addition to that, Sandstorm Gold is 1.49 times more volatile than Royal Gold. It trades about -0.14 of its total potential returns per unit of risk. Royal Gold is currently generating about -0.06 per unit of volatility. If you would invest 15,224 in Royal Gold on August 24, 2024 and sell it today you would lose (406.00) from holding Royal Gold or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandstorm Gold Ltd vs. Royal Gold
Performance |
| Timeline |
| Sandstorm Gold |
| Royal Gold |
Sandstorm Gold and Royal Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandstorm Gold and Royal Gold
The main advantage of trading using opposite Sandstorm Gold and Royal Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Royal 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 Royal Gold will offset losses from the drop in Royal Gold's long position.| Sandstorm Gold vs. Agnico Eagle Mines | Sandstorm Gold vs. Pan American Silver | Sandstorm Gold vs. Kinross Gold | Sandstorm Gold vs. B2Gold Corp |
| Royal Gold vs. Centerra Gold | Royal Gold vs. Gold Fields Ltd | Royal Gold vs. Eldorado Gold Corp | Royal Gold vs. Osisko Gold Ro |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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