Correlation Between Equinox Gold and Coeur Mining

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

Diversification Opportunities for Equinox Gold and Coeur Mining

0.78

Correlation Coefficient

Equinox Gold  Coeur Mining

Poor diversification

The 3 months correlation between Equinox and Coeur is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Equinox Gold Corp and Coeur Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coeur Mining 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 Coeur Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coeur Mining has no effect on the direction of Equinox Gold i.e., Equinox Gold and Coeur Mining go up and down completely randomly.

Pair Corralation between Equinox Gold and Coeur Mining

Considering the 90-day investment horizon Equinox Gold is expected to generate 4.75 times less return on investment than Coeur Mining. But when comparing it to its historical volatility, Equinox Gold Corp is 1.32 times less risky than Coeur Mining. It trades about 0.01 of its potential returns per unit of risk. Coeur Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  614.00  in Coeur Mining on August 30, 2024 and sell it today you would earn a total of  35.00  from holding Coeur Mining or generate 5.7% return on investment over 90 days.

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

Equinox Gold Corp  vs.  Coeur Mining

Equinox Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equinox Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Coeur Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coeur Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Coeur Mining may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Equinox Gold and Coeur Mining

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

The idea behind Equinox Gold Corp and Coeur Mining 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.