Correlation Between World Copper and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both World Copper 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 World Copper and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Copper and Sandstorm Gold Ltd, you can compare the effects of market volatilities on World Copper 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 World Copper with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Copper and Sandstorm Gold.
Diversification Opportunities for World Copper and Sandstorm Gold
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between World and Sandstorm is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding World Copper and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and World Copper 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 World Copper 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 World Copper i.e., World Copper and Sandstorm Gold go up and down completely randomly.
Pair Corralation between World Copper and Sandstorm Gold
Assuming the 90 days horizon World Copper is expected to generate 4.18 times more return on investment than Sandstorm Gold. However, World Copper is 4.18 times more volatile than Sandstorm Gold Ltd. It trades about 0.05 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.04 per unit of risk. If you would invest 4.50 in World Copper on December 7, 2024 and sell it today you would earn a total of 0.00 from holding World Copper or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Copper vs. Sandstorm Gold Ltd
Performance |
| Timeline |
| World Copper |
| Sandstorm Gold |
World Copper and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Copper and Sandstorm Gold
The main advantage of trading using opposite World Copper and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Copper 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.| World Copper vs. Bell Copper Corp | World Copper vs. Northwest Copper Corp | World Copper vs. Wealth Minerals |
| Sandstorm Gold vs. Osisko Gold Ro | Sandstorm Gold vs. Wheaton Precious Metals | Sandstorm Gold vs. Seabridge Gold | Sandstorm Gold vs. MAG Silver Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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