Correlation Between Zumiez and Sandstorm Gold

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

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

Diversification Opportunities for Zumiez and Sandstorm Gold

0.15

Correlation Coefficient

Zumiez  Sandstorm Gold

Average diversification

The 3 months correlation between Zumiez and Sandstorm is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez 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 Zumiez 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 Zumiez 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 Zumiez i.e., Zumiez and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Zumiez and Sandstorm Gold

Given the investment horizon of 90 days Zumiez Inc is expected to generate 1.51 times more return on investment than Sandstorm Gold. However, Zumiez is 1.51 times more volatile than Sandstorm Gold Ltd. It trades about -0.04 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.1 per unit of risk. If you would invest  2,165  in Zumiez Inc on September 25, 2024 and sell it today you would lose (268.00) from holding Zumiez Inc or give up 12.38% of portfolio value over 90 days.

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

Zumiez Inc  vs.  Sandstorm Gold Ltd

Zumiez Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zumiez Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Zumiez and Sandstorm Gold

The main advantage of trading using opposite Zumiez and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zumiez 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 Zumiez 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.