Correlation Between Ivanhoe Energy and Agnico Eagle

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

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

Diversification Opportunities for Ivanhoe Energy and Agnico Eagle

-0.68

Correlation Coefficient

Ivanhoe Energy  Agnico Eagle

Excellent diversification

The 3 months correlation between Ivanhoe and Agnico is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy 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 Ivanhoe Energy 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 Ivanhoe Energy 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 Ivanhoe Energy i.e., Ivanhoe Energy and Agnico Eagle go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and Agnico Eagle

Assuming the 90 days horizon Ivanhoe Energy is expected to under-perform the Agnico Eagle. In addition to that, Ivanhoe Energy is 2.18 times more volatile than Agnico Eagle Mines. It trades about -0.06 of its total potential returns per unit of risk. Agnico Eagle Mines is currently generating about 0.29 per unit of volatility. If you would invest  11,146  in Agnico Eagle Mines on December 30, 2024 and sell it today you would earn a total of  4,233  from holding Agnico Eagle Mines or generate 37.98% return on investment over 90 days.

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

Ivanhoe Energy  vs.  Agnico Eagle Mines

Ivanhoe Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivanhoe Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Agnico Eagle displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ivanhoe Energy and Agnico Eagle

The main advantage of trading using opposite Ivanhoe Energy and Agnico Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Energy 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 Ivanhoe Energy 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.