Correlation Between Toro and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both Toro and Sandstorm 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 Toro and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toro Co and Sandstorm Gold Ltd, you can compare the effects of market volatilities on Toro and Sandstorm 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 Toro with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toro and Sandstorm Gold.
Diversification Opportunities for Toro and Sandstorm Gold
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Toro and Sandstorm is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Toro Co and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Toro 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 Toro Co are associated (or correlated) with Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Toro i.e., Toro and Sandstorm Gold go up and down completely randomly.
Pair Corralation between Toro and Sandstorm Gold
Considering the 90-day investment horizon Toro Co is expected to under-perform the Sandstorm Gold. But the stock apears to be less risky and, when comparing its historical volatility, Toro Co is 1.24 times less risky than Sandstorm Gold. The stock trades about -0.01 of its potential returns per unit of risk. The Sandstorm Gold Ltd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 508.00 in Sandstorm Gold Ltd on September 2, 2024 and sell it today you would earn a total of 71.00 from holding Sandstorm Gold Ltd or generate 13.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toro Co vs. Sandstorm Gold Ltd
Performance |
| Timeline |
| Toro |
| Sandstorm Gold |
Toro and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toro and Sandstorm Gold
The main advantage of trading using opposite Toro and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toro position performs unexpectedly, Sandstorm 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 Sandstorm Gold will offset losses from the drop in Sandstorm Gold's long position.The idea behind Toro Co and Sandstorm Gold Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sandstorm Gold vs. Fortitude Gold Corp | Sandstorm Gold vs. New Gold | Sandstorm Gold vs. Galiano Gold | Sandstorm Gold vs. GoldMining |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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