Correlation Between Agnico Eagle and TVA

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

Diversification Opportunities for Agnico Eagle and TVA

AgnicoTVADiversified AwayAgnicoTVADiversified Away100%
-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Agnico and TVA is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and TVA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TVA Group 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 TVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TVA Group has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and TVA go up and down completely randomly.

Pair Corralation between Agnico Eagle and TVA

Assuming the 90 days trading horizon Agnico Eagle Mines is expected to generate 0.3 times more return on investment than TVA. However, Agnico Eagle Mines is 3.3 times less risky than TVA. It trades about 0.15 of its potential returns per unit of risk. TVA Group is currently generating about -0.01 per unit of risk. If you would invest  11,636  in Agnico Eagle Mines on November 21, 2024 and sell it today you would earn a total of  2,158  from holding Agnico Eagle Mines or generate 18.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Agnico Eagle Mines  vs.  TVA Group

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-100102030
JavaScript chart by amCharts 3.21.15AEM TVA-B
       Timeline  
Agnico Eagle Mines 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Agnico Eagle displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb110115120125130135140145
TVA Group 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days TVA Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TVA is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.80.850.90.9511.051.11.15

Agnico Eagle and TVA Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.07-4.55-3.02-1.50.01.663.365.056.74 0.020.040.060.08
JavaScript chart by amCharts 3.21.15AEM TVA-B
       Returns  

Pair Trading with Agnico Eagle and TVA

The main advantage of trading using opposite Agnico Eagle and TVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agnico Eagle position performs unexpectedly, TVA 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 TVA will offset losses from the drop in TVA's long position.
The idea behind Agnico Eagle Mines and TVA Group 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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