Correlation Between Agnico Eagle and MAG Silver
Can any of the company-specific risk be diversified away by investing in both Agnico Eagle and MAG Silver 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 MAG Silver 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 MAG Silver Corp, you can compare the effects of market volatilities on Agnico Eagle and MAG Silver 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 MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agnico Eagle and MAG Silver.
Diversification Opportunities for Agnico Eagle and MAG Silver
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Agnico and MAG is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and MAG Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG Silver Corp 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 MAG Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG Silver Corp has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and MAG Silver go up and down completely randomly.
Pair Corralation between Agnico Eagle and MAG Silver
Considering the 90-day investment horizon Agnico Eagle is expected to generate 3.81 times less return on investment than MAG Silver. But when comparing it to its historical volatility, Agnico Eagle Mines is 1.45 times less risky than MAG Silver. It trades about 0.06 of its potential returns per unit of risk. MAG Silver Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,217 in MAG Silver Corp on August 31, 2024 and sell it today you would earn a total of 318.00 from holding MAG Silver Corp or generate 26.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agnico Eagle Mines vs. MAG Silver Corp
Performance |
| Timeline |
| Agnico Eagle Mines |
| MAG Silver Corp |
Agnico Eagle and MAG Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agnico Eagle and MAG Silver
The main advantage of trading using opposite Agnico Eagle and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agnico Eagle position performs unexpectedly, MAG Silver 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 MAG Silver will offset losses from the drop in MAG Silver's long position.| Agnico Eagle vs. Franco Nevada | Agnico Eagle vs. Alamos Gold | Agnico Eagle vs. Seabridge Gold | Agnico Eagle vs. Wheaton Precious Metals |
| MAG Silver vs. Silvercorp Metals | MAG Silver vs. Dolly Varden Silver | MAG Silver vs. Aya Gold Silver | MAG Silver vs. Reyna Silver Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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