Correlation Between IAMGold and B2Gold Corp
Can any of the company-specific risk be diversified away by investing in both IAMGold and B2Gold Corp 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 B2Gold Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAMGold and B2Gold Corp, you can compare the effects of market volatilities on IAMGold and B2Gold Corp 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 B2Gold Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAMGold and B2Gold Corp.
Diversification Opportunities for IAMGold and B2Gold Corp
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IAMGold and B2Gold is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and B2Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B2Gold Corp 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 B2Gold Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B2Gold Corp has no effect on the direction of IAMGold i.e., IAMGold and B2Gold Corp go up and down completely randomly.
Pair Corralation between IAMGold and B2Gold Corp
Assuming the 90 days trading horizon IAMGold is expected to generate 1.61 times more return on investment than B2Gold Corp. However, IAMGold is 1.61 times more volatile than B2Gold Corp. It trades about -0.03 of its potential returns per unit of risk. B2Gold Corp is currently generating about -0.3 per unit of risk. If you would invest 784.00 in IAMGold on August 29, 2024 and sell it today you would lose (30.00) from holding IAMGold or give up 3.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAMGold vs. B2Gold Corp
Performance |
| Timeline |
| IAMGold |
| B2Gold Corp |
IAMGold and B2Gold Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAMGold and B2Gold Corp
The main advantage of trading using opposite IAMGold and B2Gold Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAMGold position performs unexpectedly, B2Gold Corp 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 B2Gold Corp will offset losses from the drop in B2Gold Corp's long position.| IAMGold vs. Eldorado Gold Corp | IAMGold vs. Kinross Gold Corp | IAMGold vs. Alamos Gold | IAMGold vs. New 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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