Correlation Between Sandstorm Gold and Cabot Oil

Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and Cabot Oil 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 Cabot Oil 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 Cabot Oil Gas, you can compare the effects of market volatilities on Sandstorm Gold and Cabot Oil 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 Cabot Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and Cabot Oil.

Diversification Opportunities for Sandstorm Gold and Cabot Oil

0.0

Correlation Coefficient

Sandstorm Gold  Cabot Oil

Pay attention - limited upside

The 3 months correlation between Sandstorm and Cabot is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Cabot Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot Oil Gas 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 Cabot Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot Oil Gas has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Cabot Oil go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Cabot Oil

If you would invest (100.00) in Cabot Oil Gas on September 29, 2024 and sell it today you would earn a total of  100.00  from holding Cabot Oil Gas or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sandstorm Gold Ltd  vs.  Cabot Oil Gas

Sandstorm Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandstorm Gold Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Cabot Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabot Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cabot Oil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sandstorm Gold and Cabot Oil

The main advantage of trading using opposite Sandstorm Gold and Cabot Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, Cabot Oil 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 Cabot Oil will offset losses from the drop in Cabot Oil's long position.

The idea behind Sandstorm Gold Ltd and Cabot Oil Gas 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.