Correlation Between Sandstorm Gold and MACYS

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

Diversification Opportunities for Sandstorm Gold and MACYS

0.34

Correlation Coefficient

Sandstorm Gold  MACYS

Weak diversification

The 3 months correlation between Sandstorm and MACYS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and MACYS RETAIL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACYS RETAIL HLDGS 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 MACYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACYS RETAIL HLDGS has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and MACYS go up and down completely randomly.

Pair Corralation between Sandstorm Gold and MACYS

Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to under-perform the MACYS. In addition to that, Sandstorm Gold is 1.6 times more volatile than MACYS RETAIL HLDGS. It trades about -0.05 of its total potential returns per unit of risk. MACYS RETAIL HLDGS is currently generating about 0.0 per unit of volatility. If you would invest  10,192  in MACYS RETAIL HLDGS on September 30, 2024 and sell it today you would lose (82.00) from holding MACYS RETAIL HLDGS or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

Sandstorm Gold Ltd  vs.  MACYS RETAIL HLDGS

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.

MACYS RETAIL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MACYS RETAIL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MACYS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sandstorm Gold and MACYS

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

The idea behind Sandstorm Gold Ltd and MACYS RETAIL HLDGS 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.