Correlation Between Agnico Eagle and Western Metallica

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

Diversification Opportunities for Agnico Eagle and Western Metallica

0.26

Correlation Coefficient

Agnico Eagle  Western Metallica

Modest diversification

The 3 months correlation between Agnico and Western is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Western Metallica Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Metallica 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 Western Metallica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Metallica has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Western Metallica go up and down completely randomly.

Pair Corralation between Agnico Eagle and Western Metallica

Assuming the 90 days trading horizon Agnico Eagle is expected to generate 406.5 times less return on investment than Western Metallica. But when comparing it to its historical volatility, Agnico Eagle Mines is 4.84 times less risky than Western Metallica. It trades about 0.0 of its potential returns per unit of risk. Western Metallica Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Western Metallica Resources on October 6, 2024 and sell it today you would lose (0.50) from holding Western Metallica Resources or give up 16.67% of portfolio value over 90 days.

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

Agnico Eagle Mines  vs.  Western Metallica Resources

Agnico Eagle Mines

Risk-Adjusted Performance

6 of 100

Modest

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.

Western Metallica

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Western Metallica Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Western Metallica showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agnico Eagle and Western Metallica

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

The idea behind Agnico Eagle Mines and Western Metallica Resources 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.