Correlation Between Agnico Eagle and FTAI Aviation

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

Diversification Opportunities for Agnico Eagle and FTAI Aviation

0.16

Correlation Coefficient

Agnico Eagle  FTAI Aviation

Average diversification

The 3 months correlation between Agnico and FTAI is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation 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 FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and FTAI Aviation go up and down completely randomly.

Pair Corralation between Agnico Eagle and FTAI Aviation

Considering the 90-day investment horizon Agnico Eagle Mines is expected to generate 1.49 times more return on investment than FTAI Aviation. However, Agnico Eagle is 1.49 times more volatile than FTAI Aviation Ltd. It trades about 0.06 of its potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.05 per unit of risk. If you would invest  4,957  in Agnico Eagle Mines on September 26, 2024 and sell it today you would earn a total of  2,916  from holding Agnico Eagle Mines or generate 58.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.37%
Values	Daily Returns

Agnico Eagle Mines  vs.  FTAI Aviation Ltd

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.

FTAI Aviation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FTAI Aviation Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, FTAI Aviation is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Agnico Eagle and FTAI Aviation

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

The idea behind Agnico Eagle Mines and FTAI Aviation Ltd 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.