Correlation Between Equinox Gold and Dynacor Gold

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

Diversification Opportunities for Equinox Gold and Dynacor Gold

-0.12

Correlation Coefficient

Equinox Gold  Dynacor Gold

Good diversification

The 3 months correlation between Equinox and Dynacor is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Equinox Gold Corp and Dynacor Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynacor Gold Mines 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 Dynacor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynacor Gold Mines has no effect on the direction of Equinox Gold i.e., Equinox Gold and Dynacor Gold go up and down completely randomly.

Pair Corralation between Equinox Gold and Dynacor Gold

Considering the 90-day investment horizon Equinox Gold is expected to generate 1.18 times less return on investment than Dynacor Gold. In addition to that, Equinox Gold is 1.77 times more volatile than Dynacor Gold Mines. It trades about 0.07 of its total potential returns per unit of risk. Dynacor Gold Mines is currently generating about 0.14 per unit of volatility. If you would invest  353.00  in Dynacor Gold Mines on September 5, 2024 and sell it today you would earn a total of  83.00  from holding Dynacor Gold Mines or generate 23.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.82%
Values	Daily Returns

Equinox Gold Corp  vs.  Dynacor Gold Mines

Equinox Gold Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equinox Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Equinox Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dynacor Gold Mines

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynacor Gold Mines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Dynacor Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equinox Gold and Dynacor Gold

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

The idea behind Equinox Gold Corp and Dynacor Gold Mines 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.