Correlation Between Financial and Equinox Gold

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

By analyzing existing cross correlation between Financial 15 Split and Equinox Gold Corp, you can compare the effects of market volatilities on Financial 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 Financial with a short position of Equinox Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Equinox Gold.

Diversification Opportunities for Financial and Equinox Gold

-0.31

Correlation Coefficient

Financial  Equinox Gold

Very good diversification

The 3 months correlation between Financial and Equinox is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split 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 Financial 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 Financial 15 Split 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 Financial i.e., Financial and Equinox Gold go up and down completely randomly.

Pair Corralation between Financial and Equinox Gold

Assuming the 90 days trading horizon Financial is expected to generate 1.49 times less return on investment than Equinox Gold. But when comparing it to its historical volatility, Financial 15 Split is 11.27 times less risky than Equinox Gold. It trades about 0.25 of its potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  645.00  in Equinox Gold Corp on October 4, 2024 and sell it today you would earn a total of  121.00  from holding Equinox Gold Corp or generate 18.76% return on investment over 90 days.

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

Financial 15 Split  vs.  Equinox Gold Corp

Financial 15 Split

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 very healthy basic indicators, Equinox Gold is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Financial and Equinox Gold

The main advantage of trading using opposite Financial and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial 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 Financial 15 Split 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.