Correlation Between Blue Star and Agnico Eagle

Can any of the company-specific risk be diversified away by investing in both Blue Star and Agnico Eagle 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 Blue Star and Agnico Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Star Gold and Agnico Eagle Mines, you can compare the effects of market volatilities on Blue Star and Agnico Eagle 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 Blue Star with a short position of Agnico Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Star and Agnico Eagle.

Diversification Opportunities for Blue Star and Agnico Eagle

0.09

Correlation Coefficient

Blue Star  Agnico Eagle

Significant diversification

The 3 months correlation between Blue and Agnico is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Gold and Agnico Eagle Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agnico Eagle Mines and Blue Star 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 Blue Star Gold are associated (or correlated) with Agnico Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agnico Eagle Mines has no effect on the direction of Blue Star i.e., Blue Star and Agnico Eagle go up and down completely randomly.

Pair Corralation between Blue Star and Agnico Eagle

Assuming the 90 days horizon Blue Star Gold is expected to generate 2.99 times more return on investment than Agnico Eagle. However, Blue Star is 2.99 times more volatile than Agnico Eagle Mines. It trades about 0.03 of its potential returns per unit of risk. Agnico Eagle Mines is currently generating about -0.04 per unit of risk. If you would invest  5.00  in Blue Star Gold on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Blue Star Gold or generate 0.0% return on investment over 90 days.

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

Blue Star Gold  vs.  Agnico Eagle Mines

Blue Star Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Blue Star may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Agnico Eagle Mines

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Agnico Eagle may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Blue Star and Agnico Eagle

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

The idea behind Blue Star Gold and Agnico Eagle 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.