Correlation Between SNDL and Sandstorm Gold

Can any of the company-specific risk be diversified away by investing in both SNDL 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 SNDL and Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SNDL Inc and Sandstorm Gold Ltd, you can compare the effects of market volatilities on SNDL 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 SNDL with a short position of Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Sandstorm Gold.

Diversification Opportunities for SNDL and Sandstorm Gold

0.76

Correlation Coefficient

SNDL  Sandstorm Gold

Poor diversification

The 3 months correlation between SNDL and Sandstorm is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold and SNDL 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 SNDL Inc 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 SNDL i.e., SNDL and Sandstorm Gold go up and down completely randomly.

Pair Corralation between SNDL and Sandstorm Gold

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Sandstorm Gold. In addition to that, SNDL is 1.38 times more volatile than Sandstorm Gold Ltd. It trades about -0.06 of its total potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.05 per unit of volatility. If you would invest  599.00  in Sandstorm Gold Ltd on September 30, 2024 and sell it today you would lose (52.00) from holding Sandstorm Gold Ltd or give up 8.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SNDL Inc  vs.  Sandstorm Gold Ltd

SNDL Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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.

Pair Trading with SNDL and Sandstorm Gold

The main advantage of trading using opposite SNDL and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL 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 SNDL Inc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .