Correlation Between Agnico Eagle and Equinox Gold

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

Diversification Opportunities for Agnico Eagle and Equinox Gold

0.78

Correlation Coefficient

Agnico Eagle  Equinox Gold

Poor diversification

The 3 months correlation between Agnico and Equinox is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Equinox Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinox Gold Corp 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 Equinox Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinox Gold Corp has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Equinox Gold go up and down completely randomly.

Pair Corralation between Agnico Eagle and Equinox Gold

Considering the 90-day investment horizon Agnico Eagle Mines is expected to generate 0.54 times more return on investment than Equinox Gold. However, Agnico Eagle Mines is 1.84 times less risky than Equinox Gold. It trades about 0.38 of its potential returns per unit of risk. Equinox Gold Corp is currently generating about 0.19 per unit of risk. If you would invest  7,873  in Agnico Eagle Mines on October 25, 2024 and sell it today you would earn a total of  1,050  from holding Agnico Eagle Mines or generate 13.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Agnico Eagle Mines  vs.  Equinox Gold Corp

Agnico Eagle Mines

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Agnico Eagle is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Equinox Gold Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equinox Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Equinox Gold is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agnico Eagle and Equinox Gold

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

The idea behind Agnico Eagle Mines and Equinox Gold Corp 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.