Correlation Between Metalla Royalty and Equinox Gold

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

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

Diversification Opportunities for Metalla Royalty and Equinox Gold

0.32

Correlation Coefficient

Metalla Royalty  Equinox Gold

Weak diversification

The 3 months correlation between Metalla and Equinox is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Metalla Royalty Streaming 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 Metalla Royalty 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 Metalla Royalty Streaming 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 Metalla Royalty i.e., Metalla Royalty and Equinox Gold go up and down completely randomly.

Pair Corralation between Metalla Royalty and Equinox Gold

Assuming the 90 days horizon Metalla Royalty Streaming is expected to under-perform the Equinox Gold. In addition to that, Metalla Royalty is 1.02 times more volatile than Equinox Gold Corp. It trades about -0.16 of its total potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.09 per unit of volatility. If you would invest  755.00  in Equinox Gold Corp on September 2, 2024 and sell it today you would earn a total of  41.00  from holding Equinox Gold Corp or generate 5.43% return on investment over 90 days.

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

Metalla Royalty Streaming  vs.  Equinox Gold Corp

Metalla Royalty Streaming

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metalla Royalty Streaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Metalla Royalty showed solid returns over the last few months and may actually be approaching a breakup point.

Equinox Gold Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equinox Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Equinox Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Metalla Royalty and Equinox Gold

The main advantage of trading using opposite Metalla Royalty and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalla Royalty 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 Metalla Royalty Streaming 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.