Correlation Between Contango ORE and Equinox Gold

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

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

Diversification Opportunities for Contango ORE and Equinox Gold

-0.3

Correlation Coefficient

Contango ORE  Equinox Gold

Very good diversification

The 3 months correlation between Contango and Equinox is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE 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 Contango ORE 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 Contango ORE 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 Contango ORE i.e., Contango ORE and Equinox Gold go up and down completely randomly.

Pair Corralation between Contango ORE and Equinox Gold

Given the investment horizon of 90 days Contango ORE is expected to generate 8.41 times less return on investment than Equinox Gold. In addition to that, Contango ORE is 1.18 times more volatile than Equinox Gold Corp. It trades about 0.02 of its total potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.18 per unit of volatility. If you would invest  497.00  in Equinox Gold Corp on December 29, 2024 and sell it today you would earn a total of  190.00  from holding Equinox Gold Corp or generate 38.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Contango ORE  vs.  Equinox Gold Corp

Contango ORE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Contango ORE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Contango ORE is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Equinox Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Contango ORE and Equinox Gold

The main advantage of trading using opposite Contango ORE and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contango ORE 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 Contango ORE 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.