Correlation Between IAMGold and Barrick Gold

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

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

Diversification Opportunities for IAMGold and Barrick Gold

0.39

Correlation Coefficient

IAMGold  Barrick Gold

Weak diversification

The 3 months correlation between IAMGold and Barrick is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and Barrick Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold Corp 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 Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold Corp has no effect on the direction of IAMGold i.e., IAMGold and Barrick Gold go up and down completely randomly.

Pair Corralation between IAMGold and Barrick Gold

Assuming the 90 days trading horizon IAMGold is expected to generate 1.77 times more return on investment than Barrick Gold. However, IAMGold is 1.77 times more volatile than Barrick Gold Corp. It trades about 0.12 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.19 per unit of risk. If you would invest  727.00  in IAMGold on December 30, 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

IAMGold  vs.  Barrick Gold Corp

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.

Barrick Gold Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Barrick Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IAMGold and Barrick Gold

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

The idea behind IAMGold and Barrick Gold Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.