Correlation Between Global Ship and Agnico Eagle

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

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

Diversification Opportunities for Global Ship and Agnico Eagle

-0.1

Correlation Coefficient

Global Ship  Agnico Eagle

Good diversification

The 3 months correlation between Global and Agnico is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease 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 Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Agnico Eagle go up and down completely randomly.

Pair Corralation between Global Ship and Agnico Eagle

Assuming the 90 days trading horizon Global Ship is expected to generate 2.44 times less return on investment than Agnico Eagle. But when comparing it to its historical volatility, Global Ship Lease is 2.3 times less risky than Agnico Eagle. It trades about 0.06 of its potential returns per unit of risk. Agnico Eagle Mines is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Global Ship Lease  vs.  Agnico Eagle Mines

Global Ship Lease

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Global Ship and Agnico Eagle

The main advantage of trading using opposite Global Ship and Agnico Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Global Ship Lease 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.