Correlation Between Sandstorm Gold and Trio Petroleum

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

Diversification Opportunities for Sandstorm Gold and Trio Petroleum

0.58

Correlation Coefficient

Sandstorm Gold  Trio Petroleum

Very weak diversification

The 3 months correlation between Sandstorm and Trio is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and Trio Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Petroleum Corp 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 Trio Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Petroleum Corp has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and Trio Petroleum go up and down completely randomly.

Pair Corralation between Sandstorm Gold and Trio Petroleum

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to under-perform the Trio Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Sandstorm Gold Ltd is 13.73 times less risky than Trio Petroleum. The stock trades about -0.02 of its potential returns per unit of risk. The Trio Petroleum Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  133.00  in Trio Petroleum Corp on September 20, 2024 and sell it today you would earn a total of  40.00  from holding Trio Petroleum Corp or generate 30.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Sandstorm Gold Ltd  vs.  Trio Petroleum Corp

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 unfluctuating 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.

Trio Petroleum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trio Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sandstorm Gold and Trio Petroleum

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

The idea behind Sandstorm Gold Ltd and Trio Petroleum Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.