Correlation Between Red Pine and IAMGold
Can any of the company-specific risk be diversified away by investing in both Red Pine 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 Red Pine and IAMGold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Pine Exploration and IAMGold, you can compare the effects of market volatilities on Red Pine 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 Red Pine with a short position of IAMGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and IAMGold.
Diversification Opportunities for Red Pine and IAMGold
Average diversification
The 3 months correlation between Red and IAMGold is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold and Red Pine 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 Red Pine Exploration 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 Red Pine i.e., Red Pine and IAMGold go up and down completely randomly.
Pair Corralation between Red Pine and IAMGold
Assuming the 90 days horizon Red Pine is expected to generate 1.01 times less return on investment than IAMGold. In addition to that, Red Pine is 2.13 times more volatile than IAMGold. It trades about 0.04 of its total potential returns per unit of risk. IAMGold is currently generating about 0.08 per unit of volatility. If you would invest 373.00 in IAMGold on September 12, 2024 and sell it today you would earn a total of 425.00 from holding IAMGold or generate 113.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Pine Exploration vs. IAMGold
Performance |
| Timeline |
| Red Pine Exploration |
| IAMGold |
Red Pine and IAMGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and IAMGold
The main advantage of trading using opposite Red Pine and IAMGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine 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.| Red Pine vs. Ressources Minieres Radisson | Red Pine vs. Galantas Gold Corp | Red Pine vs. Kore Mining | Red Pine vs. Strikepoint Gold |
| IAMGold vs. Ressources Minieres Radisson | IAMGold vs. Galantas Gold Corp | IAMGold vs. Red Pine Exploration | IAMGold vs. Kore Mining |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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