Correlation Between Western Copper and Sandstorm Gold

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Can any of the company-specific risk be diversified away by investing in both Western 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 Western 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 Western Copper and and Sandstorm Gold Ltd, you can compare the effects of market volatilities on Western 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 Western Copper with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Sandstorm Gold.

Diversification Opportunities for Western Copper and Sandstorm Gold

WesternSandstormDiversified AwayWesternSandstormDiversified Away100%
-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Western and Sandstorm is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and Western 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 Western Copper and 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 Western Copper i.e., Western Copper and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Western Copper and Sandstorm Gold

Considering the 90-day investment horizon Western Copper is expected to generate 4.67 times less return on investment than Sandstorm Gold. In addition to that, Western Copper is 1.16 times more volatile than Sandstorm Gold Ltd. It trades about 0.03 of its total potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.16 per unit of volatility. If you would invest  571.00  in Sandstorm Gold Ltd on November 23, 2024 and sell it today you would earn a total of  48.00  from holding Sandstorm Gold Ltd or generate 8.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Western Copper and  vs.  Sandstorm Gold Ltd

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-1001020
JavaScript chart by amCharts 3.21.15WRN SAND
       Timeline  
Western Copper 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Western Copper is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.051.11.15
Sandstorm Gold 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Sandstorm Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5.45.65.866.26.46.6

Western Copper and Sandstorm Gold Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.88-3.66-2.43-1.21-0.01871.082.213.334.455.57 0.040.050.060.070.080.09
JavaScript chart by amCharts 3.21.15WRN SAND
       Returns  

Pair Trading with Western Copper and Sandstorm Gold

The main advantage of trading using opposite Western Copper and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western 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.
The idea behind Western Copper and 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.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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