Correlation Between Foremost Lithium and Agnico Eagle

Can any of the company-specific risk be diversified away by investing in both Foremost Lithium 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 Foremost Lithium and Agnico Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Foremost Lithium Resource and Agnico Eagle Mines, you can compare the effects of market volatilities on Foremost Lithium 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 Foremost Lithium with a short position of Agnico Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foremost Lithium and Agnico Eagle.

Diversification Opportunities for Foremost Lithium and Agnico Eagle

-0.26

Correlation Coefficient

Foremost Lithium  Agnico Eagle

Very good diversification

The 3 months correlation between Foremost and Agnico is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Foremost Lithium Resource 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 Foremost Lithium 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 Foremost Lithium Resource 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 Foremost Lithium i.e., Foremost Lithium and Agnico Eagle go up and down completely randomly.

Pair Corralation between Foremost Lithium and Agnico Eagle

Given the investment horizon of 90 days Foremost Lithium Resource is expected to generate 2.55 times more return on investment than Agnico Eagle. However, Foremost Lithium is 2.55 times more volatile than Agnico Eagle Mines. It trades about -0.01 of its potential returns per unit of risk. Agnico Eagle Mines is currently generating about -0.09 per unit of risk. If you would invest  245.00  in Foremost Lithium Resource on March 12, 2024 and sell it today you would lose (11.00) from holding Foremost Lithium Resource or give up 4.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Foremost Lithium Resource  vs.  Agnico Eagle Mines

Foremost Lithium Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foremost Lithium Resource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Agnico Eagle Mines

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Agnico Eagle displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Foremost Lithium and Agnico Eagle

The main advantage of trading using opposite Foremost Lithium and Agnico Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foremost Lithium 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.

The idea behind Foremost Lithium Resource 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.