Correlation Between IAMGold and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both IAMGold and Wheaton Precious 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 Wheaton Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAMGold and Wheaton Precious Metals, you can compare the effects of market volatilities on IAMGold and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAMGold and Wheaton Precious.
Diversification Opportunities for IAMGold and Wheaton Precious
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IAMGold and Wheaton is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of IAMGold i.e., IAMGold and Wheaton Precious go up and down completely randomly.
Pair Corralation between IAMGold and Wheaton Precious
Considering the 90-day investment horizon IAMGold is expected to generate 1.54 times more return on investment than Wheaton Precious. However, IAMGold is 1.54 times more volatile than Wheaton Precious Metals. It trades about -0.05 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about -0.15 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAMGold vs. Wheaton Precious Metals
Performance |
| Timeline |
| IAMGold |
| Wheaton Precious Metals |
IAMGold and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAMGold and Wheaton Precious
The main advantage of trading using opposite IAMGold and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAMGold position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' long position.The idea behind IAMGold and Wheaton Precious Metals 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.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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