Correlation Between Equinox Gold and DRDGOLD Limited
Can any of the company-specific risk be diversified away by investing in both Equinox Gold and DRDGOLD Limited 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 Equinox Gold and DRDGOLD Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinox Gold Corp and DRDGOLD Limited ADR, you can compare the effects of market volatilities on Equinox Gold and DRDGOLD Limited 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 Equinox Gold with a short position of DRDGOLD Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinox Gold and DRDGOLD Limited.
Diversification Opportunities for Equinox Gold and DRDGOLD Limited
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Equinox and DRDGOLD is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Equinox Gold Corp and DRDGOLD Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRDGOLD Limited ADR and Equinox 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 Equinox Gold Corp are associated (or correlated) with DRDGOLD Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRDGOLD Limited ADR has no effect on the direction of Equinox Gold i.e., Equinox Gold and DRDGOLD Limited go up and down completely randomly.
Pair Corralation between Equinox Gold and DRDGOLD Limited
Considering the 90-day investment horizon Equinox Gold Corp is expected to generate 0.95 times more return on investment than DRDGOLD Limited. However, Equinox Gold Corp is 1.05 times less risky than DRDGOLD Limited. It trades about 0.04 of its potential returns per unit of risk. DRDGOLD Limited ADR is currently generating about -0.24 per unit of risk. If you would invest 554.00 in Equinox Gold Corp on September 1, 2024 and sell it today you would earn a total of 11.00 from holding Equinox Gold Corp or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinox Gold Corp vs. DRDGOLD Limited ADR
Performance |
| Timeline |
| Equinox Gold Corp |
| DRDGOLD Limited ADR |
Equinox Gold and DRDGOLD Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinox Gold and DRDGOLD Limited
The main advantage of trading using opposite Equinox Gold and DRDGOLD Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinox Gold position performs unexpectedly, DRDGOLD Limited 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 DRDGOLD Limited will offset losses from the drop in DRDGOLD Limited's long position.| Equinox Gold vs. Fortitude Gold Corp | Equinox Gold vs. New Gold | Equinox Gold vs. Galiano Gold | Equinox Gold vs. GoldMining |
| DRDGOLD Limited vs. Osisko Gold Ro | DRDGOLD Limited vs. Eldorado Gold Corp | DRDGOLD Limited vs. SSR Mining | DRDGOLD Limited vs. Idaho Strategic Resources |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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