Correlation Between Pan American and Agnico Eagle
Can any of the company-specific risk be diversified away by investing in both Pan American 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 Pan American and Agnico Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan American Silver and Agnico Eagle Mines, you can compare the effects of market volatilities on Pan American 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 Pan American with a short position of Agnico Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan American and Agnico Eagle.
Diversification Opportunities for Pan American and Agnico Eagle
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pan and Agnico is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pan American Silver 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 Pan American 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 Pan American Silver 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 Pan American i.e., Pan American and Agnico Eagle go up and down completely randomly.
Pair Corralation between Pan American and Agnico Eagle
Given the investment horizon of 90 days Pan American is expected to generate 1.04 times less return on investment than Agnico Eagle. In addition to that, Pan American is 1.57 times more volatile than Agnico Eagle Mines. It trades about 0.07 of its total potential returns per unit of risk. Agnico Eagle Mines is currently generating about 0.11 per unit of volatility. If you would invest 5,268 in Agnico Eagle Mines on August 26, 2024 and sell it today you would earn a total of 3,162 from holding Agnico Eagle Mines or generate 60.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan American Silver vs. Agnico Eagle Mines
Performance |
| Timeline |
| Pan American Silver |
| Agnico Eagle Mines |
Pan American and Agnico Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pan American and Agnico Eagle
The main advantage of trading using opposite Pan American and Agnico Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan American 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.| Pan American vs. Newmont Goldcorp Corp | Pan American vs. Wheaton Precious Metals | Pan American vs. Franco Nevada | Pan American vs. Kinross Gold |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |