Correlation Between Equinox Gold and AngloGold Ashanti

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

Diversification Opportunities for Equinox Gold and AngloGold Ashanti

0.5

Correlation Coefficient

Equinox Gold  AngloGold Ashanti

Very weak diversification

The 3 months correlation between Equinox and AngloGold is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Equinox Gold Corp and AngloGold Ashanti plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AngloGold Ashanti plc 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 AngloGold Ashanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AngloGold Ashanti plc has no effect on the direction of Equinox Gold i.e., Equinox Gold and AngloGold Ashanti go up and down completely randomly.

Pair Corralation between Equinox Gold and AngloGold Ashanti

Considering the 90-day investment horizon Equinox Gold Corp is expected to generate 1.3 times more return on investment than AngloGold Ashanti. However, Equinox Gold is 1.3 times more volatile than AngloGold Ashanti plc. It trades about 0.02 of its potential returns per unit of risk. AngloGold Ashanti plc is currently generating about -0.02 per unit of risk. If you would invest  631.00  in Equinox Gold Corp on September 13, 2024 and sell it today you would earn a total of  10.00  from holding Equinox Gold Corp or generate 1.58% return on investment over 90 days.

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

Equinox Gold Corp  vs.  AngloGold Ashanti plc

Equinox Gold Corp

Risk-Adjusted Performance

1 of 100

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.

AngloGold Ashanti plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AngloGold Ashanti plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AngloGold Ashanti is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Equinox Gold and AngloGold Ashanti

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

The idea behind Equinox Gold Corp and AngloGold Ashanti plc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.