Correlation Between Prudential Financial and Agnico Eagle

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

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

Diversification Opportunities for Prudential Financial and Agnico Eagle

-0.62

Correlation Coefficient

Prudential Financial  Agnico Eagle

Excellent diversification

The 3 months correlation between Prudential and Agnico is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial 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 Prudential Financial 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 Prudential Financial 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 Prudential Financial i.e., Prudential Financial and Agnico Eagle go up and down completely randomly.

Pair Corralation between Prudential Financial and Agnico Eagle

Considering the 90-day investment horizon Prudential Financial is expected to under-perform the Agnico Eagle. But the stock apears to be less risky and, when comparing its historical volatility, Prudential Financial is 3.06 times less risky than Agnico Eagle. The stock trades about -0.04 of its potential returns per unit of risk. The Agnico Eagle Mines is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  4,822  in Agnico Eagle Mines on February 19, 2024 and sell it today you would earn a total of  2,189  from holding Agnico Eagle Mines or generate 45.4% return on investment over 90 days.

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

Prudential Financial  vs.  Agnico Eagle Mines

Prudential Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Prudential Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Agnico Eagle Mines

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 29 (%) 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.

Pair Trading with Prudential Financial and Agnico Eagle

The main advantage of trading using opposite Prudential Financial and Agnico Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial 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 Prudential Financial 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.