Correlation Between Agnico Eagle and Volcanic Gold
Can any of the company-specific risk be diversified away by investing in both Agnico Eagle and Volcanic Gold 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 Volcanic Gold 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 Volcanic Gold Mines, you can compare the effects of market volatilities on Agnico Eagle and Volcanic Gold 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 Volcanic Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agnico Eagle and Volcanic Gold.
Diversification Opportunities for Agnico Eagle and Volcanic Gold
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Agnico and Volcanic is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Volcanic Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volcanic Gold Mines 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 Volcanic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volcanic Gold Mines has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Volcanic Gold go up and down completely randomly.
Pair Corralation between Agnico Eagle and Volcanic Gold
Assuming the 90 days trading horizon Agnico Eagle Mines is expected to under-perform the Volcanic Gold. But the stock apears to be less risky and, when comparing its historical volatility, Agnico Eagle Mines is 8.97 times less risky than Volcanic Gold. The stock trades about -0.04 of its potential returns per unit of risk. The Volcanic Gold Mines is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Volcanic Gold Mines on October 6, 2024 and sell it today you would earn a total of 5.00 from holding Volcanic Gold Mines or generate 83.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Agnico Eagle Mines vs. Volcanic Gold Mines
Performance |
Timeline |
Agnico Eagle Mines |
Volcanic Gold Mines |
Agnico Eagle and Volcanic Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Agnico Eagle and Volcanic Gold
The main advantage of trading using opposite Agnico Eagle and Volcanic Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agnico Eagle position performs unexpectedly, Volcanic Gold 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 Volcanic Gold will offset losses from the drop in Volcanic Gold's long position.Agnico Eagle vs. Franco Nevada | Agnico Eagle vs. Kinross Gold Corp | Agnico Eagle vs. Barrick Gold Corp | Agnico Eagle vs. Wheaton Precious Metals |
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Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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