Correlation Between Agnico Eagle and Cache Exploration

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

Diversification Opportunities for Agnico Eagle and Cache Exploration

0.0

Correlation Coefficient

Agnico Eagle  Cache Exploration

Pay attention - limited upside

The 3 months correlation between Agnico and Cache is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Cache Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cache Exploration 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 Cache Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cache Exploration has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Cache Exploration go up and down completely randomly.

Pair Corralation between Agnico Eagle and Cache Exploration

If you would invest  7,703  in Agnico Eagle Mines on December 19, 2024 and sell it today you would earn a total of  2,845  from holding Agnico Eagle Mines or generate 36.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Agnico Eagle Mines  vs.  Cache Exploration

Agnico Eagle Mines

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Agnico Eagle displayed solid returns over the last few months and may actually be approaching a breakup point.

Cache Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cache Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cache Exploration is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Agnico Eagle and Cache Exploration

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

The idea behind Agnico Eagle Mines and Cache Exploration 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.