Correlation Between Agnico Eagle and Olympic Steel

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

Diversification Opportunities for Agnico Eagle and Olympic Steel

-0.5

Correlation Coefficient

Agnico Eagle  Olympic Steel

Very good diversification

The 3 months correlation between Agnico and Olympic is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Agnico Eagle i.e., Agnico Eagle and Olympic Steel go up and down completely randomly.

Pair Corralation between Agnico Eagle and Olympic Steel

Considering the 90-day investment horizon Agnico Eagle Mines is expected to generate 0.57 times more return on investment than Olympic Steel. However, Agnico Eagle Mines is 1.75 times less risky than Olympic Steel. It trades about 0.24 of its potential returns per unit of risk. Olympic Steel is currently generating about -0.08 per unit of risk. If you would invest  6,534  in Agnico Eagle Mines on June 23, 2024 and sell it today you would earn a total of  1,779  from holding Agnico Eagle Mines or generate 27.23% return on investment over 90 days.

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

Agnico Eagle Mines  vs.  Olympic Steel

Agnico Eagle Mines

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Agnico Eagle displayed solid returns over the last few months and may actually be approaching a breakup point.

Olympic Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Olympic Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in October 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Agnico Eagle and Olympic Steel

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

The idea behind Agnico Eagle Mines and Olympic Steel 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 Global Correlations module to find global opportunities by holding instruments from different markets.