Correlation Between Agnico-Eagle Mines and Anglogold Ashanti

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

Diversification Opportunities for Agnico-Eagle Mines and Anglogold Ashanti

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Agnico-Eagle and Anglogold is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Agnico-Eagle Mines and Anglogold Ashanti Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglogold Ashanti and Agnico-Eagle Mines 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 Anglogold Ashanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglogold Ashanti has no effect on the direction of Agnico-Eagle Mines i.e., Agnico-Eagle Mines and Anglogold Ashanti go up and down completely randomly.

Pair Corralation between Agnico-Eagle Mines and Anglogold Ashanti

Considering the 90-day investment horizon Agnico-Eagle Mines is expected to under-perform the Anglogold Ashanti. But the stock apears to be less risky and, when comparing its historical volatility, Agnico-Eagle Mines is 1.22 times less risky than Anglogold Ashanti. The stock trades about -0.03 of its potential returns per unit of risk. The Anglogold Ashanti is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,600  in Anglogold Ashanti on July 8, 2022 and sell it today you would lose (1,126)  from holding Anglogold Ashanti or give up 43.31% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Agnico-Eagle Mines  vs.  Anglogold Ashanti Ltd

 Performance (%) 
       Timeline  
Agnico-Eagle Mines 
Agnico-Eagle Performance
0 of 100
Over the last 90 days Agnico-Eagle Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical and fundamental indicators, Agnico-Eagle Mines is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

Agnico-Eagle Price Channel

Anglogold Ashanti 
Anglogold Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Anglogold Ashanti are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Anglogold Ashanti is not utilizing all of its potentials. The new stock price uproar, may contribute to short-horizon losses for the private investors.

Anglogold Price Channel

Agnico-Eagle Mines and Anglogold Ashanti Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agnico-Eagle Mines and Anglogold Ashanti

The main advantage of trading using opposite Agnico-Eagle Mines and Anglogold Ashanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agnico-Eagle Mines position performs unexpectedly, Anglogold Ashanti 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 Anglogold Ashanti will offset losses from the drop in Anglogold Ashanti's long position.
Agnico-Eagle Mines vs. Exxon Mobil Corp
The idea behind Agnico-Eagle Mines and Anglogold Ashanti 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.
Anglogold Ashanti vs. Exxon Mobil 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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