Correlation Between Agnico Eagle and Tree Island

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

Diversification Opportunities for Agnico Eagle and Tree Island

0.19

Correlation Coefficient

Agnico Eagle  Tree Island

Average diversification

The 3 months correlation between Agnico and Tree is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Tree Island Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree Island Steel 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 Tree Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree Island Steel has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Tree Island go up and down completely randomly.

Pair Corralation between Agnico Eagle and Tree Island

Assuming the 90 days trading horizon Agnico Eagle Mines is expected to under-perform the Tree Island. But the stock apears to be less risky and, when comparing its historical volatility, Agnico Eagle Mines is 1.11 times less risky than Tree Island. The stock trades about -0.06 of its potential returns per unit of risk. The Tree Island Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  305.00  in Tree Island Steel on October 5, 2024 and sell it today you would earn a total of  5.00  from holding Tree Island Steel or generate 1.64% return on investment over 90 days.

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

Agnico Eagle Mines  vs.  Tree Island Steel

Agnico Eagle Mines

Risk-Adjusted Performance

6 of 100

OK

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. In spite of very unfluctuating primary indicators, Agnico Eagle may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tree Island Steel

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tree Island Steel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Tree Island may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Agnico Eagle and Tree Island

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

The idea behind Agnico Eagle Mines and Tree Island Steel 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.