Correlation Between IAMGold and Dundee Precious
Can any of the company-specific risk be diversified away by investing in both IAMGold and Dundee 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 Dundee Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAMGold and Dundee Precious Metals, you can compare the effects of market volatilities on IAMGold and Dundee 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 Dundee Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAMGold and Dundee Precious.
Diversification Opportunities for IAMGold and Dundee Precious
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IAMGold and Dundee is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee 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 Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of IAMGold i.e., IAMGold and Dundee Precious go up and down completely randomly.
Pair Corralation between IAMGold and Dundee Precious
Assuming the 90 days trading horizon IAMGold is expected to generate 1.67 times more return on investment than Dundee Precious. However, IAMGold is 1.67 times more volatile than Dundee Precious Metals. It trades about 0.07 of its potential returns per unit of risk. Dundee Precious Metals is currently generating about 0.06 per unit of risk. If you would invest 398.00 in IAMGold on August 31, 2024 and sell it today you would earn a total of 374.00 from holding IAMGold or generate 93.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAMGold vs. Dundee Precious Metals
Performance |
| Timeline |
| IAMGold |
| Dundee Precious Metals |
IAMGold and Dundee Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAMGold and Dundee Precious
The main advantage of trading using opposite IAMGold and Dundee Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAMGold position performs unexpectedly, Dundee 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 Dundee Precious will offset losses from the drop in Dundee Precious' long position.| IAMGold vs. Eldorado Gold Corp | IAMGold vs. Kinross Gold Corp | IAMGold vs. Alamos Gold | IAMGold vs. New Gold |
| Dundee Precious vs. Centerra Gold | Dundee Precious vs. SSR Mining | Dundee Precious vs. Alamos Gold | Dundee Precious vs. Endeavour Mining Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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