Correlation Between IAMGold and Mastercard

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

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

Diversification Opportunities for IAMGold and Mastercard

0.61

Correlation Coefficient

IAMGold  Mastercard

Poor diversification

The 3 months correlation between IAMGold and Mastercard is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard and IAMGold 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 IAMGold are associated (or correlated) with Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of IAMGold i.e., IAMGold and Mastercard go up and down completely randomly.

Pair Corralation between IAMGold and Mastercard

Considering the 90-day investment horizon IAMGold is expected to generate 2.72 times more return on investment than Mastercard. However, IAMGold is 2.72 times more volatile than Mastercard. It trades about 0.11 of its potential returns per unit of risk. Mastercard is currently generating about 0.03 per unit of risk. If you would invest  518.00  in IAMGold on December 21, 2024 and sell it today you would earn a total of  102.00  from holding IAMGold or generate 19.69% return on investment over 90 days.

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

IAMGold  vs.  Mastercard

IAMGold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IAMGold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, IAMGold reported solid returns over the last few months and may actually be approaching a breakup point.

Mastercard

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mastercard is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IAMGold and Mastercard

The main advantage of trading using opposite IAMGold and Mastercard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAMGold position performs unexpectedly, Mastercard 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 Mastercard will offset losses from the drop in Mastercard's long position.

The idea behind IAMGold and Mastercard 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.