Correlation Between Lion One and Equinox Gold

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

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

Diversification Opportunities for Lion One and Equinox Gold

0.44

Correlation Coefficient

Lion One  Equinox Gold

Very weak diversification

The 3 months correlation between Lion and Equinox is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals 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 Lion One 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 Lion One Metals 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 Lion One i.e., Lion One and Equinox Gold go up and down completely randomly.

Pair Corralation between Lion One and Equinox Gold

Assuming the 90 days horizon Lion One is expected to generate 1.03 times less return on investment than Equinox Gold. In addition to that, Lion One is 1.94 times more volatile than Equinox Gold Corp. It trades about 0.1 of its total potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.2 per unit of volatility. If you would invest  497.00  in Equinox Gold Corp on December 28, 2024 and sell it today you would earn a total of  213.00  from holding Equinox Gold Corp or generate 42.86% return on investment over 90 days.

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

Lion One Metals  vs.  Equinox Gold Corp

Lion One Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lion One Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Lion One reported 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 15 (%) 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 Lion One and Equinox Gold

The main advantage of trading using opposite Lion One and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One 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 Lion One Metals 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.