Correlation Between Agnico Eagle and Evolution Mining

Can any of the company-specific risk be diversified away by investing in both Agnico Eagle and Evolution Mining 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 Evolution Mining 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 Evolution Mining Limited, you can compare the effects of market volatilities on Agnico Eagle and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agnico Eagle and Evolution Mining.

Diversification Opportunities for Agnico Eagle and Evolution Mining

0.93

Correlation Coefficient

Agnico Eagle  Evolution Mining

Almost no diversification

The 3 months correlation between Agnico and Evolution is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Evolution Mining go up and down completely randomly.

Pair Corralation between Agnico Eagle and Evolution Mining

Assuming the 90 days horizon Agnico Eagle is expected to generate 1.31 times less return on investment than Evolution Mining. But when comparing it to its historical volatility, Agnico Eagle Mines is 1.38 times less risky than Evolution Mining. It trades about 0.26 of its potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  284.00  in Evolution Mining Limited on December 30, 2024 and sell it today you would earn a total of  130.00  from holding Evolution Mining Limited or generate 45.77% return on investment over 90 days.

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

Agnico Eagle Mines  vs.  Evolution Mining Limited

Agnico Eagle Mines

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Agnico Eagle reported solid returns over the last few months and may actually be approaching a breakup point.

Evolution Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Evolution Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agnico Eagle and Evolution Mining

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

The idea behind Agnico Eagle Mines and Evolution Mining Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.