Correlation Between Agnico Eagle and Star Alliance

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

Diversification Opportunities for Agnico Eagle and Star Alliance

0.05

Correlation Coefficient

Agnico Eagle  Star Alliance

Significant diversification

The 3 months correlation between Agnico and Star is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Star Alliance International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Alliance Intern 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 Star Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Alliance Intern has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Star Alliance go up and down completely randomly.

Pair Corralation between Agnico Eagle and Star Alliance

Considering the 90-day investment horizon Agnico Eagle is expected to generate 7.16 times less return on investment than Star Alliance. But when comparing it to its historical volatility, Agnico Eagle Mines is 7.01 times less risky than Star Alliance. It trades about 0.02 of its potential returns per unit of risk. Star Alliance International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Star Alliance International on October 24, 2024 and sell it today you would lose (0.04) from holding Star Alliance International or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.78%
Values	Daily Returns

Agnico Eagle Mines  vs.  Star Alliance International

Agnico Eagle Mines

Risk-Adjusted Performance

0 of 100

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.

Star Alliance Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Alliance International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Star Alliance is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Agnico Eagle and Star Alliance

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

The idea behind Agnico Eagle Mines and Star Alliance International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.