Correlation Between New Gold and IAMGold
Can any of the company-specific risk be diversified away by investing in both New Gold 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 New Gold and IAMGold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Gold and IAMGold, you can compare the effects of market volatilities on New Gold 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 New Gold with a short position of IAMGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and IAMGold.
Diversification Opportunities for New Gold and IAMGold
Very weak diversification
The 3 months correlation between New and IAMGold is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding New Gold and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold and New Gold 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 New Gold 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 New Gold i.e., New Gold and IAMGold go up and down completely randomly.
Pair Corralation between New Gold and IAMGold
Assuming the 90 days trading horizon New Gold is expected to generate 1.02 times less return on investment than IAMGold. But when comparing it to its historical volatility, New Gold is 1.01 times less risky than IAMGold. It trades about 0.13 of its potential returns per unit of risk. IAMGold is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 320.00 in IAMGold on August 28, 2024 and sell it today you would earn a total of 428.00 from holding IAMGold or generate 133.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
New Gold vs. IAMGold
Performance |
| Timeline |
| New Gold |
| IAMGold |
New Gold and IAMGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Gold and IAMGold
The main advantage of trading using opposite New Gold and IAMGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Gold 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.| New Gold vs. IAMGold | New Gold vs. Eldorado Gold Corp | New Gold vs. Alamos Gold | New Gold vs. NovaGold Resources |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |