Correlation Between Agnico Eagle and Renforth Resources

Can any of the company-specific risk be diversified away by investing in both Agnico Eagle and Renforth Resources 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 Renforth Resources 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 Renforth Resources, you can compare the effects of market volatilities on Agnico Eagle and Renforth Resources 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 Renforth Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agnico Eagle and Renforth Resources.

Diversification Opportunities for Agnico Eagle and Renforth Resources

-0.45

Correlation Coefficient

Agnico Eagle  Renforth Resources

Very good diversification

The 3 months correlation between Agnico and Renforth is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Renforth Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renforth 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 Renforth Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renforth Resources has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Renforth Resources go up and down completely randomly.

Pair Corralation between Agnico Eagle and Renforth Resources

Considering the 90-day investment horizon Agnico Eagle is expected to generate 11.63 times less return on investment than Renforth Resources. But when comparing it to its historical volatility, Agnico Eagle Mines is 11.77 times less risky than Renforth Resources. It trades about 0.08 of its potential returns per unit of risk. Renforth Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.04  in Renforth Resources on September 13, 2024 and sell it today you would lose (0.14) from holding Renforth Resources or give up 13.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

Agnico Eagle Mines  vs.  Renforth Resources

Agnico Eagle Mines

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Agnico Eagle is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Renforth Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Renforth Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Renforth Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agnico Eagle and Renforth Resources

The main advantage of trading using opposite Agnico Eagle and Renforth Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agnico Eagle position performs unexpectedly, Renforth Resources 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 Renforth Resources will offset losses from the drop in Renforth Resources' long position.

The idea behind Agnico Eagle Mines and Renforth Resources 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.