Correlation Between IAMGold and New Gold
Can any of the company-specific risk be diversified away by investing in both IAMGold and New Gold 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 IAMGold and New Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAMGold and New Gold, you can compare the effects of market volatilities on IAMGold and New Gold 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 IAMGold with a short position of New Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAMGold and New Gold.
Diversification Opportunities for IAMGold and New Gold
Very weak diversification
The 3 months correlation between IAMGold and New is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and New Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Gold and IAMGold 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 IAMGold are associated (or correlated) with New Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Gold has no effect on the direction of IAMGold i.e., IAMGold and New Gold go up and down completely randomly.
Pair Corralation between IAMGold and New Gold
Considering the 90-day investment horizon IAMGold is expected to generate 1.12 times more return on investment than New Gold. However, IAMGold is 1.12 times more volatile than New Gold. It trades about -0.05 of its potential returns per unit of risk. New Gold is currently generating about -0.08 per unit of risk. If you would invest 565.00 in IAMGold on August 28, 2024 and sell it today you would lose (32.00) from holding IAMGold or give up 5.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAMGold vs. New Gold
Performance |
| Timeline |
| IAMGold |
| New Gold |
IAMGold and New Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAMGold and New Gold
The main advantage of trading using opposite IAMGold and New Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAMGold position performs unexpectedly, New Gold 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 New Gold will offset losses from the drop in New Gold's long position.The idea behind IAMGold and New Gold 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.| New Gold vs. Eldorado Gold Corp | New Gold vs. Kinross Gold | New Gold vs. Harmony Gold Mining | New Gold vs. Coeur Mining |
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 the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |