Correlation Between Agnico Eagle and Fortuna Silver

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

Diversification Opportunities for Agnico Eagle and Fortuna Silver

0.8

Correlation Coefficient

Agnico Eagle  Fortuna Silver

Very poor diversification

The 3 months correlation between Agnico and Fortuna is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver 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 Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Fortuna Silver go up and down completely randomly.

Pair Corralation between Agnico Eagle and Fortuna Silver

Considering the 90-day investment horizon Agnico Eagle Mines is expected to generate 0.6 times more return on investment than Fortuna Silver. However, Agnico Eagle Mines is 1.66 times less risky than Fortuna Silver. It trades about 0.06 of its potential returns per unit of risk. Fortuna Silver Mines is currently generating about 0.02 per unit of risk. If you would invest  5,063  in Agnico Eagle Mines on September 23, 2024 and sell it today you would earn a total of  2,753  from holding Agnico Eagle Mines or generate 54.37% return on investment over 90 days.

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

Agnico Eagle Mines  vs.  Fortuna Silver Mines

Agnico Eagle Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agnico Eagle Mines has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Fortuna Silver Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortuna Silver Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fortuna Silver is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Agnico Eagle and Fortuna Silver

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

The idea behind Agnico Eagle Mines and Fortuna Silver Mines 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.