Correlation Between Barrick Gold and IAMGold

Can any of the company-specific risk be diversified away by investing in both Barrick 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 Barrick Gold and IAMGold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barrick Gold Corp and IAMGold, you can compare the effects of market volatilities on Barrick 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 Barrick Gold with a short position of IAMGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and IAMGold.

Diversification Opportunities for Barrick Gold and IAMGold

0.16

Correlation Coefficient

Barrick Gold  IAMGold

Average diversification

The 3 months correlation between Barrick and IAMGold is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold and Barrick 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 Barrick Gold Corp 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 Barrick Gold i.e., Barrick Gold and IAMGold go up and down completely randomly.

Pair Corralation between Barrick Gold and IAMGold

Assuming the 90 days trading horizon Barrick Gold Corp is expected to under-perform the IAMGold. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold Corp is 2.11 times less risky than IAMGold. The stock trades about -0.06 of its potential returns per unit of risk. The IAMGold is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  657.00  in IAMGold on September 1, 2024 and sell it today you would earn a total of  115.00  from holding IAMGold or generate 17.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Barrick Gold Corp  vs.  IAMGold

Barrick Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barrick Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

IAMGold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IAMGold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IAMGold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barrick Gold and IAMGold

The main advantage of trading using opposite Barrick Gold and IAMGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick 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.

The idea behind Barrick Gold Corp and IAMGold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.