Correlation Between Agnico Eagle and Montauk Renewables

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

Diversification Opportunities for Agnico Eagle and Montauk Renewables

0.34

Correlation Coefficient

Agnico Eagle  Montauk Renewables

Weak diversification

The 3 months correlation between Agnico and Montauk is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Montauk Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montauk Renewables 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 Montauk Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montauk Renewables has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Montauk Renewables go up and down completely randomly.

Pair Corralation between Agnico Eagle and Montauk Renewables

Considering the 90-day investment horizon Agnico Eagle Mines is expected to under-perform the Montauk Renewables. In addition to that, Agnico Eagle is 1.21 times more volatile than Montauk Renewables. It trades about -0.05 of its total potential returns per unit of risk. Montauk Renewables is currently generating about 0.35 per unit of volatility. If you would invest  468.00  in Montauk Renewables on March 12, 2024 and sell it today you would earn a total of  73.00  from holding Montauk Renewables or generate 15.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Agnico Eagle Mines  vs.  Montauk Renewables

Agnico Eagle Mines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Agnico Eagle displayed solid returns over the last few months and may actually be approaching a breakup point.

Montauk Renewables

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Agnico Eagle and Montauk Renewables

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

The idea behind Agnico Eagle Mines and Montauk Renewables 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.