Correlation Between Exxon and Equinox Gold

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

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

Diversification Opportunities for Exxon and Equinox Gold

-0.65

Correlation Coefficient

Exxon  Equinox Gold

Excellent diversification

The 3 months correlation between Exxon and Equinox is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR 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 Exxon 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 EXXON MOBIL CDR 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 Exxon i.e., Exxon and Equinox Gold go up and down completely randomly.

Pair Corralation between Exxon and Equinox Gold

Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to generate 0.56 times more return on investment than Equinox Gold. However, EXXON MOBIL CDR is 1.77 times less risky than Equinox Gold. It trades about 0.01 of its potential returns per unit of risk. Equinox Gold Corp is currently generating about -0.04 per unit of risk. If you would invest  1,993  in EXXON MOBIL CDR on April 22, 2025 and sell it today you would lose (4.00) from holding EXXON MOBIL CDR or give up 0.2% of portfolio value over 90 days.

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

EXXON MOBIL CDR  vs.  Equinox Gold Corp

EXXON MOBIL CDR

Risk-Adjusted Performance

Weak

Over the last 90 days EXXON MOBIL CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Equinox Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equinox Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Exxon and Equinox Gold

The main advantage of trading using opposite Exxon and Equinox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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 EXXON MOBIL CDR 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.