Correlation Between Sandstorm Gold and MAG Silver
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and MAG Silver 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 MAG Silver 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 MAG Silver Corp, you can compare the effects of market volatilities on Sandstorm Gold and MAG Silver 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 MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and MAG Silver.
Diversification Opportunities for Sandstorm Gold and MAG Silver
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandstorm and MAG is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and MAG Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG Silver 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 MAG Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG Silver Corp has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and MAG Silver go up and down completely randomly.
Pair Corralation between Sandstorm Gold and MAG Silver
Assuming the 90 days trading horizon Sandstorm Gold is expected to generate 1.76 times less return on investment than MAG Silver. But when comparing it to its historical volatility, Sandstorm Gold Ltd is 1.28 times less risky than MAG Silver. It trades about 0.04 of its potential returns per unit of risk. MAG Silver Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,444 in MAG Silver Corp on August 28, 2024 and sell it today you would earn a total of 673.00 from holding MAG Silver Corp or generate 46.61% 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. MAG Silver Corp
Performance |
| Timeline |
| Sandstorm Gold |
| MAG Silver Corp |
Sandstorm Gold and MAG Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandstorm Gold and MAG Silver
The main advantage of trading using opposite Sandstorm Gold and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, MAG Silver 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 MAG Silver will offset losses from the drop in MAG Silver's long position.| Sandstorm Gold vs. Osisko Gold Ro | Sandstorm Gold vs. Wheaton Precious Metals | Sandstorm Gold vs. Seabridge Gold | Sandstorm Gold vs. MAG Silver Corp |
| MAG Silver vs. Pan American Silver | MAG Silver vs. Endeavour Silver Corp | MAG Silver vs. SSR Mining | MAG Silver 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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