Correlation Between Lundin Mining and IAMGold
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and IAMGold 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 Lundin Mining and IAMGold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining and IAMGold, you can compare the effects of market volatilities on Lundin Mining and IAMGold 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 Lundin Mining with a short position of IAMGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and IAMGold.
Diversification Opportunities for Lundin Mining and IAMGold
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lundin and IAMGold is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold and Lundin Mining 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 Lundin Mining are associated (or correlated) with IAMGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAMGold has no effect on the direction of Lundin Mining i.e., Lundin Mining and IAMGold go up and down completely randomly.
Pair Corralation between Lundin Mining and IAMGold
Assuming the 90 days trading horizon Lundin Mining is expected to generate 1.88 times less return on investment than IAMGold. But when comparing it to its historical volatility, Lundin Mining is 1.31 times less risky than IAMGold. It trades about 0.05 of its potential returns per unit of risk. IAMGold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 393.00 in IAMGold on September 1, 2024 and sell it today you would earn a total of 379.00 from holding IAMGold or generate 96.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Lundin Mining vs. IAMGold
Performance |
| Timeline |
| Lundin Mining |
| IAMGold |
Lundin Mining and IAMGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and IAMGold
The main advantage of trading using opposite Lundin Mining and IAMGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, IAMGold 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 IAMGold will offset losses from the drop in IAMGold's long position.| Lundin Mining vs. HudBay Minerals | Lundin Mining vs. First Quantum Minerals | Lundin Mining vs. Ivanhoe Mines | Lundin Mining vs. Capstone Mining Corp |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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