Correlation Between Agnico Eagle and Northern Star
Can any of the company-specific risk be diversified away by investing in both Agnico Eagle and Northern Star 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 Northern Star 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 Northern Star Resources, you can compare the effects of market volatilities on Agnico Eagle and Northern Star 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 Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agnico Eagle and Northern Star.
Diversification Opportunities for Agnico Eagle and Northern Star
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Agnico and Northern is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources 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 Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Northern Star go up and down completely randomly.
Pair Corralation between Agnico Eagle and Northern Star
Considering the 90-day investment horizon Agnico Eagle Mines is expected to generate 0.52 times more return on investment than Northern Star. However, Agnico Eagle Mines is 1.94 times less risky than Northern Star. It trades about 0.3 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.14 per unit of risk. If you would invest 7,884 in Agnico Eagle Mines on November 23, 2024 and sell it today you would earn a total of 1,921 from holding Agnico Eagle Mines or generate 24.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
Agnico Eagle Mines vs. Northern Star Resources
Performance |
| Timeline |
| Agnico Eagle Mines |
| Northern Star Resources |
Agnico Eagle and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agnico Eagle and Northern Star
The main advantage of trading using opposite Agnico Eagle and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agnico Eagle position performs unexpectedly, Northern Star 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 Northern Star will offset losses from the drop in Northern Star's long position.| Agnico Eagle vs. Wheaton Precious Metals | ||
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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