Correlation Between Equinox Gold and B2Gold Corp

Can any of the company-specific risk be diversified away by investing in both Equinox Gold and B2Gold Corp 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 B2Gold Corp 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 B2Gold Corp, you can compare the effects of market volatilities on Equinox Gold and B2Gold Corp 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 B2Gold Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinox Gold and B2Gold Corp.

Diversification Opportunities for Equinox Gold and B2Gold Corp

0.3

Correlation Coefficient

Equinox Gold  B2Gold Corp

Weak diversification

The 3 months correlation between Equinox and B2Gold is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Equinox Gold Corp and B2Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B2Gold Corp 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 B2Gold Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B2Gold Corp has no effect on the direction of Equinox Gold i.e., Equinox Gold and B2Gold Corp go up and down completely randomly.

Pair Corralation between Equinox Gold and B2Gold Corp

Considering the 90-day investment horizon Equinox Gold Corp is expected to generate 1.59 times more return on investment than B2Gold Corp. However, Equinox Gold is 1.59 times more volatile than B2Gold Corp. It trades about 0.19 of its potential returns per unit of risk. B2Gold Corp is currently generating about -0.07 per unit of risk. If you would invest  507.00  in Equinox Gold Corp on October 25, 2024 and sell it today you would earn a total of  62.00  from holding Equinox Gold Corp or generate 12.23% return on investment over 90 days.

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

Equinox Gold Corp  vs.  B2Gold Corp

Equinox Gold Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equinox Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Equinox Gold is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

B2Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B2Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Equinox Gold and B2Gold Corp

The main advantage of trading using opposite Equinox Gold and B2Gold Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinox Gold position performs unexpectedly, B2Gold Corp 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 B2Gold Corp will offset losses from the drop in B2Gold Corp's long position.

The idea behind Equinox Gold Corp and B2Gold 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.