Correlation Between Newmont and Agnico Eagle

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

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

Diversification Opportunities for Newmont and Agnico Eagle

-0.23

Correlation Coefficient

Newmont  Agnico Eagle

Very good diversification

The 3 months correlation between Newmont and Agnico is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Newmont 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 Newmont 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 Newmont 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 Newmont i.e., Newmont and Agnico Eagle go up and down completely randomly.

Pair Corralation between Newmont and Agnico Eagle

Assuming the 90 days horizon Newmont is expected to under-perform the Agnico Eagle. But the stock apears to be less risky and, when comparing its historical volatility, Newmont is 1.04 times less risky than Agnico Eagle. The stock trades about -0.32 of its potential returns per unit of risk. The Agnico Eagle Mines is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  7,882  in Agnico Eagle Mines on September 22, 2024 and sell it today you would lose (318.00) from holding Agnico Eagle Mines or give up 4.03% of portfolio value over 90 days.

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

Newmont  vs.  Agnico Eagle Mines

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Agnico Eagle Mines

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Agnico Eagle is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Newmont and Agnico Eagle

The main advantage of trading using opposite Newmont and Agnico Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont 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 Newmont 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.