Correlation Between First Majestic and Equinox Gold

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

By analyzing existing cross correlation between First Majestic Silver and Equinox Gold Corp, you can compare the effects of market volatilities on First Majestic 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 First Majestic with a short position of Equinox Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Equinox Gold.

Diversification Opportunities for First Majestic and Equinox Gold

0.39

Correlation Coefficient

First Majestic  Equinox Gold

Weak diversification

The 3 months correlation between First and Equinox is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver 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 First Majestic 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 First Majestic Silver 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 First Majestic i.e., First Majestic and Equinox Gold go up and down completely randomly.

Pair Corralation between First Majestic and Equinox Gold

Assuming the 90 days horizon First Majestic is expected to generate 1.33 times less return on investment than Equinox Gold. In addition to that, First Majestic is 1.2 times more volatile than Equinox Gold Corp. It trades about 0.11 of its total potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.17 per unit of volatility. If you would invest  715.00  in Equinox Gold Corp on December 29, 2024 and sell it today you would earn a total of  270.00  from holding Equinox Gold Corp or generate 37.76% return on investment over 90 days.

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

First Majestic Silver  vs.  Equinox Gold Corp

First Majestic Silver

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Majestic displayed solid returns over the last few months and may actually be approaching a breakup point.

Equinox Gold Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equinox Gold Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Equinox Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and Equinox Gold

The main advantage of trading using opposite First Majestic and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic 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 First Majestic Silver 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .