Correlation Between Sandstorm Gold and Sprott Physical
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Sprott Physical 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 Sprott Physical 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 Sprott Physical Gold, you can compare the effects of market volatilities on Sandstorm Gold and Sprott Physical 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 Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Sprott Physical.
Diversification Opportunities for Sandstorm Gold and Sprott Physical
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandstorm and Sprott is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Sprott Physical go up and down completely randomly.
Pair Corralation between Sandstorm Gold and Sprott Physical
Assuming the 90 days trading horizon Sandstorm Gold is expected to generate 1.73 times less return on investment than Sprott Physical. In addition to that, Sandstorm Gold is 2.54 times more volatile than Sprott Physical Gold. It trades about 0.03 of its total potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.11 per unit of volatility. If you would invest 1,851 in Sprott Physical Gold on August 26, 2024 and sell it today you would earn a total of 1,063 from holding Sprott Physical Gold or generate 57.43% 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. Sprott Physical Gold
Performance |
| Timeline |
| Sandstorm Gold |
| Sprott Physical Gold |
Sandstorm Gold and Sprott Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandstorm Gold and Sprott Physical
The main advantage of trading using opposite Sandstorm Gold and Sprott Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Sprott Physical 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 Sprott Physical will offset losses from the drop in Sprott Physical'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 |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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