Correlation Between Liberty Gold and Equinox Gold

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Can any of the company-specific risk be diversified away by investing in both Liberty Gold and Equinox 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 Liberty Gold and Equinox Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Gold Corp and Equinox Gold Corp, you can compare the effects of market volatilities on Liberty Gold and Equinox 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 Liberty Gold with a short position of Equinox Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Gold and Equinox Gold.

Diversification Opportunities for Liberty Gold and Equinox Gold

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Liberty and Equinox is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Gold Corp and Equinox Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinox Gold Corp and Liberty 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 Liberty Gold Corp are associated (or correlated) with Equinox Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinox Gold Corp has no effect on the direction of Liberty Gold i.e., Liberty Gold and Equinox Gold go up and down completely randomly.

Pair Corralation between Liberty Gold and Equinox Gold

Assuming the 90 days trading horizon Liberty Gold Corp is expected to under-perform the Equinox Gold. In addition to that, Liberty Gold is 1.47 times more volatile than Equinox Gold Corp. It trades about -0.08 of its total potential returns per unit of risk. Equinox Gold Corp is currently generating about -0.03 per unit of volatility. If you would invest  813.00  in Equinox Gold Corp on August 30, 2024 and sell it today you would lose (27.00) from holding Equinox Gold Corp or give up 3.32% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Liberty Gold Corp  vs.  Equinox Gold Corp

 Performance 
       Timeline  
Liberty Gold Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Liberty Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.
Equinox Gold Corp 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Equinox Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Equinox Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Liberty Gold and Equinox Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Liberty Gold and Equinox Gold

The main advantage of trading using opposite Liberty Gold and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Gold position performs unexpectedly, Equinox 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 Equinox Gold will offset losses from the drop in Equinox Gold's long position.
The idea behind Liberty Gold Corp and Equinox Gold Corp 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.
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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