Correlation Between Sandstorm Gold and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Sandstorm Gold and ArcelorMittal 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 ArcelorMittal 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 ArcelorMittal SA ADR, you can compare the effects of market volatilities on Sandstorm Gold and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandstorm Gold and ArcelorMittal.
Diversification Opportunities for Sandstorm Gold and ArcelorMittal
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sandstorm and ArcelorMittal is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sandstorm Gold Ltd and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Sandstorm Gold i.e., Sandstorm Gold and ArcelorMittal go up and down completely randomly.
Pair Corralation between Sandstorm Gold and ArcelorMittal
Given the investment horizon of 90 days Sandstorm Gold Ltd is expected to under-perform the ArcelorMittal. In addition to that, Sandstorm Gold is 1.23 times more volatile than ArcelorMittal SA ADR. It trades about -0.14 of its total potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about -0.01 per unit of volatility. If you would invest 2,361 in ArcelorMittal SA ADR on September 24, 2024 and sell it today you would lose (43.00) from holding ArcelorMittal SA ADR or give up 1.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sandstorm Gold Ltd vs. ArcelorMittal SA ADR
Performance |
Timeline |
Sandstorm Gold |
ArcelorMittal SA ADR |
Sandstorm Gold and ArcelorMittal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sandstorm Gold and ArcelorMittal
The main advantage of trading using opposite Sandstorm Gold and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandstorm Gold position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.Sandstorm Gold vs. Wheaton Precious Metals | Sandstorm Gold vs. Royal Gold | Sandstorm Gold vs. Gold Fields Ltd | Sandstorm Gold vs. SSR Mining |
ArcelorMittal vs. Wheaton Precious Metals | ArcelorMittal vs. Royal Gold | ArcelorMittal vs. Sandstorm Gold Ltd | ArcelorMittal vs. Gold Fields Ltd |
Check out your portfolio center.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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