Correlation Between Orla Mining and Equinox Gold

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

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

Diversification Opportunities for Orla Mining and Equinox Gold

0.79

Correlation Coefficient

Orla Mining  Equinox Gold

Poor diversification

The 3 months correlation between Orla and Equinox is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Orla Mining 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 Orla Mining 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 Orla Mining 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 Orla Mining i.e., Orla Mining and Equinox Gold go up and down completely randomly.

Pair Corralation between Orla Mining and Equinox Gold

Given the investment horizon of 90 days Orla Mining is expected to generate 1.02 times more return on investment than Equinox Gold. However, Orla Mining is 1.02 times more volatile than Equinox Gold Corp. It trades about 0.28 of its potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.2 per unit of risk. If you would invest  543.00  in Orla Mining on December 28, 2024 and sell it today you would earn a total of  366.00  from holding Orla Mining or generate 67.4% return on investment over 90 days.

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

Orla Mining  vs.  Equinox Gold Corp

Orla Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orla Mining are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile essential indicators, Orla Mining sustained 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 Orla Mining and Equinox Gold

The main advantage of trading using opposite Orla Mining and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orla Mining 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 Orla Mining 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.