Correlation Between Agnico Eagle and Suncor Energy

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

Diversification Opportunities for Agnico Eagle and Suncor Energy

0.23

Correlation Coefficient

Agnico Eagle  Suncor Energy

Modest diversification

The 3 months correlation between Agnico and Suncor is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy 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 Suncor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncor Energy has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Suncor Energy go up and down completely randomly.

Pair Corralation between Agnico Eagle and Suncor Energy

Assuming the 90 days trading horizon Agnico Eagle Mines is expected to generate 1.14 times more return on investment than Suncor Energy. However, Agnico Eagle is 1.14 times more volatile than Suncor Energy. It trades about 0.1 of its potential returns per unit of risk. Suncor Energy is currently generating about 0.05 per unit of risk. If you would invest  10,664  in Agnico Eagle Mines on September 1, 2024 and sell it today you would earn a total of  1,142  from holding Agnico Eagle Mines or generate 10.71% return on investment over 90 days.

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

Agnico Eagle Mines  vs.  Suncor Energy

Agnico Eagle Mines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Agnico Eagle may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Suncor Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Suncor Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Suncor Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Agnico Eagle and Suncor Energy

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

The idea behind Agnico Eagle Mines and Suncor Energy 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.