Correlation Between Barrick Gold and Agnico Eagle

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

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

Diversification Opportunities for Barrick Gold and Agnico Eagle

0.06

Correlation Coefficient

Barrick Gold  Agnico Eagle

Significant diversification

The 3 months correlation between Barrick and Agnico is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold and Agnico Eagle Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agnico Eagle Mines and Barrick 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 Barrick Gold are associated (or correlated) with Agnico Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agnico Eagle Mines has no effect on the direction of Barrick Gold i.e., Barrick Gold and Agnico Eagle go up and down completely randomly.

Pair Corralation between Barrick Gold and Agnico Eagle

Assuming the 90 days horizon Barrick Gold is expected to generate 4.12 times less return on investment than Agnico Eagle. In addition to that, Barrick Gold is 1.05 times more volatile than Agnico Eagle Mines. It trades about 0.03 of its total potential returns per unit of risk. Agnico Eagle Mines is currently generating about 0.13 per unit of volatility. If you would invest  4,566  in Agnico Eagle Mines on September 4, 2024 and sell it today you would earn a total of  3,414  from holding Agnico Eagle Mines or generate 74.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Barrick Gold  vs.  Agnico Eagle Mines

Barrick Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barrick Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Barrick Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Agnico Eagle Mines

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Agnico Eagle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barrick Gold and Agnico Eagle

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

The idea behind Barrick Gold and Agnico Eagle 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.