Correlation Between New Gold and Equinox Gold
Can any of the company-specific risk be diversified away by investing in both New 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 New 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 New Gold and Equinox Gold Corp, you can compare the effects of market volatilities on New 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 New Gold with a short position of Equinox Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and Equinox Gold.
Diversification Opportunities for New Gold and Equinox Gold
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Equinox is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding New Gold 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 New 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 New Gold 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 New Gold i.e., New Gold and Equinox Gold go up and down completely randomly.
Pair Corralation between New Gold and Equinox Gold
Considering the 90-day investment horizon New Gold is expected to generate 1.08 times more return on investment than Equinox Gold. However, New Gold is 1.08 times more volatile than Equinox Gold Corp. It trades about 0.1 of its potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.0 per unit of risk. If you would invest 175.00 in New Gold on September 3, 2024 and sell it today you would earn a total of 100.00 from holding New Gold or generate 57.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Gold vs. Equinox Gold Corp
Performance |
| Timeline |
| New Gold |
| Equinox Gold Corp |
New Gold and Equinox Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Gold and Equinox Gold
The main advantage of trading using opposite New Gold and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New 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.| New Gold vs. Eldorado Gold Corp | New Gold vs. Kinross Gold | New Gold vs. Harmony Gold Mining | New Gold vs. Coeur Mining |
| Equinox Gold vs. Coeur Mining | Equinox Gold vs. B2Gold Corp | Equinox Gold vs. Sandstorm Gold Ltd | Equinox Gold vs. Pan American Silver |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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