Correlation Between Agnico Eagle and Northern Star

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

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

Diversification Opportunities for Agnico Eagle and Northern Star

0.67

Correlation Coefficient

Agnico Eagle  Northern Star

Poor diversification

The 3 months correlation between Agnico and Northern is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources and Agnico Eagle 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 Agnico Eagle Mines are associated (or correlated) with Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Northern Star go up and down completely randomly.

Pair Corralation between Agnico Eagle and Northern Star

Assuming the 90 days horizon Agnico Eagle Mines is expected to generate 0.8 times more return on investment than Northern Star. However, Agnico Eagle Mines is 1.25 times less risky than Northern Star. It trades about 0.08 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.04 per unit of risk. If you would invest  7,289  in Agnico Eagle Mines on September 17, 2024 and sell it today you would earn a total of  711.00  from holding Agnico Eagle Mines or generate 9.75% return on investment over 90 days.

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

Agnico Eagle Mines  vs.  Northern Star Resources

Agnico Eagle Mines

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Agnico Eagle may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Northern Star Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Star Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Northern Star is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Agnico Eagle and Northern Star

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

The idea behind Agnico Eagle Mines and Northern Star Resources 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.