Correlation Between Agnico Eagle and Valeura Energy

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

Diversification Opportunities for Agnico Eagle and Valeura Energy

0.41

Correlation Coefficient

Agnico Eagle  Valeura Energy

Very weak diversification

The 3 months correlation between Agnico and Valeura is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Valeura Energy go up and down completely randomly.

Pair Corralation between Agnico Eagle and Valeura Energy

Considering the 90-day investment horizon Agnico Eagle Mines is expected to generate 0.6 times more return on investment than Valeura Energy. However, Agnico Eagle Mines is 1.66 times less risky than Valeura Energy. It trades about 0.3 of its potential returns per unit of risk. Valeura Energy is currently generating about 0.13 per unit of risk. If you would invest  7,752  in Agnico Eagle Mines on December 28, 2024 and sell it today you would earn a total of  3,031  from holding Agnico Eagle Mines or generate 39.1% return on investment over 90 days.

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

Agnico Eagle Mines  vs.  Valeura Energy

Agnico Eagle Mines

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Agnico Eagle displayed solid returns over the last few months and may actually be approaching a breakup point.

Valeura Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Valeura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agnico Eagle and Valeura Energy

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

The idea behind Agnico Eagle Mines and Valeura Energy 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.