Correlation Between Lundin Mining and IAMGold

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

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

Diversification Opportunities for Lundin Mining and IAMGold

0.35

Correlation Coefficient

Lundin Mining  IAMGold

Weak diversification

The 3 months correlation between Lundin and IAMGold is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold and Lundin Mining 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 Lundin Mining 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 Lundin Mining i.e., Lundin Mining and IAMGold go up and down completely randomly.

Pair Corralation between Lundin Mining and IAMGold

Assuming the 90 days trading horizon Lundin Mining is expected to generate 1.49 times less return on investment than IAMGold. But when comparing it to its historical volatility, Lundin Mining is 1.5 times less risky than IAMGold. It trades about 0.09 of its potential returns per unit of risk. IAMGold is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  650.00  in IAMGold on September 4, 2024 and sell it today you would earn a total of  114.00  from holding IAMGold or generate 17.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Lundin Mining  vs.  IAMGold

Lundin Mining

Risk-Adjusted Performance

6 of 100

Modest

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

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 Lundin Mining and IAMGold

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

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.