Correlation Between Agnico Eagle and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Agnico Eagle and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Agnico Eagle and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agnico Eagle and Summit Materials.
Diversification Opportunities for Agnico Eagle and Summit Materials
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Agnico and Summit is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Summit Materials go up and down completely randomly.
Pair Corralation between Agnico Eagle and Summit Materials
Considering the 90-day investment horizon Agnico Eagle Mines is expected to generate 4.69 times more return on investment than Summit Materials. However, Agnico Eagle is 4.69 times more volatile than Summit Materials. It trades about 0.29 of its potential returns per unit of risk. Summit Materials is currently generating about 0.32 per unit of risk. If you would invest 7,832 in Agnico Eagle Mines on December 27, 2024 and sell it today you would earn a total of 2,930 from holding Agnico Eagle Mines or generate 37.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 49.18% |
Values | Daily Returns |
Agnico Eagle Mines vs. Summit Materials
Performance |
Timeline |
Agnico Eagle Mines |
Summit Materials |
Risk-Adjusted Performance
Solid
Weak | Strong |
Agnico Eagle and Summit Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Agnico Eagle and Summit Materials
The main advantage of trading using opposite Agnico Eagle and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agnico Eagle position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.Agnico Eagle vs. Constellium Nv | Agnico Eagle vs. Century Aluminum | Agnico Eagle vs. China Hongqiao Group | Agnico Eagle vs. Kaiser Aluminum |
Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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