Correlation Between First Quantum and IAMGold

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

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

Diversification Opportunities for First Quantum and IAMGold

0.3

Correlation Coefficient

First Quantum  IAMGold

Weak diversification

The 3 months correlation between First and IAMGold is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold and First Quantum 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 First Quantum Minerals 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 First Quantum i.e., First Quantum and IAMGold go up and down completely randomly.

Pair Corralation between First Quantum and IAMGold

Assuming the 90 days horizon First Quantum is expected to generate 2.32 times less return on investment than IAMGold. In addition to that, First Quantum is 1.21 times more volatile than IAMGold. It trades about 0.04 of its total potential returns per unit of risk. IAMGold is currently generating about 0.12 per unit of volatility. If you would invest  727.00  in IAMGold on December 29, 2024 and sell it today you would earn a total of  174.00  from holding IAMGold or generate 23.93% return on investment over 90 days.

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

First Quantum Minerals  vs.  IAMGold

First Quantum Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Quantum may actually be approaching a critical reversion point that can send shares even higher in April 2025.

IAMGold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IAMGold are ranked lower than 9 (%) 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 First Quantum and IAMGold

The main advantage of trading using opposite First Quantum and IAMGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Quantum 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 First Quantum Minerals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.