Correlation Between IAMGold and Pan American
Can any of the company-specific risk be diversified away by investing in both IAMGold and Pan American 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 Pan American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAMGold and Pan American Silver, you can compare the effects of market volatilities on IAMGold and Pan American 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 Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAMGold and Pan American.
Diversification Opportunities for IAMGold and Pan American
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IAMGold and Pan is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver 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 Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of IAMGold i.e., IAMGold and Pan American go up and down completely randomly.
Pair Corralation between IAMGold and Pan American
Considering the 90-day investment horizon IAMGold is expected to generate 1.44 times more return on investment than Pan American. However, IAMGold is 1.44 times more volatile than Pan American Silver. It trades about 0.26 of its potential returns per unit of risk. Pan American Silver is currently generating about 0.26 per unit of risk. If you would invest 516.00 in IAMGold on November 1, 2024 and sell it today you would earn a total of 84.00 from holding IAMGold or generate 16.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAMGold vs. Pan American Silver
Performance |
| Timeline |
| IAMGold |
| Pan American Silver |
IAMGold and Pan American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAMGold and Pan American
The main advantage of trading using opposite IAMGold and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAMGold position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American's long position.| IAMGold vs. Eldorado Gold Corp | IAMGold vs. Coeur Mining | IAMGold vs. Gold Resource | IAMGold vs. Alamos Gold |
| Pan American vs. Newmont Goldcorp Corp | Pan American vs. Wheaton Precious Metals | Pan American vs. Franco Nevada | Pan American vs. Kinross Gold |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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