Correlation Between Barrick Gold and Agnico-Eagle Mines

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Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Agnico-Eagle Mines 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 Barrick Gold and Agnico-Eagle Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barrick Gold Corp and Agnico-Eagle Mines, you can compare the effects of market volatilities on Barrick Gold and Agnico-Eagle Mines 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 Barrick Gold with a short position of Agnico-Eagle Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Agnico-Eagle Mines.

Diversification Opportunities for Barrick Gold and Agnico-Eagle Mines

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Barrick and Agnico-Eagle is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp 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 Barrick Gold 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 Barrick Gold Corp are associated (or correlated) with Agnico-Eagle Mines. 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 Barrick Gold i.e., Barrick Gold and Agnico-Eagle Mines go up and down completely randomly.

Pair Corralation between Barrick Gold and Agnico-Eagle Mines

Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 0.85 times more return on investment than Agnico-Eagle Mines. However, Barrick Gold Corp is 1.17 times less risky than Agnico-Eagle Mines. It trades about -0.04 of its potential returns per unit of risk. Agnico-Eagle Mines is currently generating about -0.03 per unit of risk. If you would invest  2,575  in Barrick Gold Corp on July 8, 2022 and sell it today you would lose (960.00)  from holding Barrick Gold Corp or give up 37.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Barrick Gold Corp  vs.  Agnico-Eagle Mines

 Performance (%) 
       Timeline  
Barrick Gold Corp 
Barrick Performance
0 of 100
Over the last 90 days Barrick Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Barrick Gold is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Barrick Price Channel

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

Barrick Gold and Agnico-Eagle Mines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barrick Gold and Agnico-Eagle Mines

The main advantage of trading using opposite Barrick Gold and Agnico-Eagle Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Agnico-Eagle Mines 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 Mines will offset losses from the drop in Agnico-Eagle Mines' long position.
Barrick Gold vs. Exxon Mobil Corp
The idea behind Barrick Gold Corp and Agnico-Eagle Mines 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.
Agnico-Eagle Mines 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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