Correlation Between Mundoro Capital and IAMGold

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

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

Diversification Opportunities for Mundoro Capital and IAMGold

0.08

Correlation Coefficient

Mundoro Capital  IAMGold

Significant diversification

The 3 months correlation between Mundoro and IAMGold is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mundoro Capital and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold and Mundoro Capital 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 Mundoro Capital 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 Mundoro Capital i.e., Mundoro Capital and IAMGold go up and down completely randomly.

Pair Corralation between Mundoro Capital and IAMGold

Assuming the 90 days horizon Mundoro Capital is expected to generate 0.62 times more return on investment than IAMGold. However, Mundoro Capital is 1.61 times less risky than IAMGold. It trades about 0.01 of its potential returns per unit of risk. IAMGold is currently generating about -0.01 per unit of risk. If you would invest  18.00  in Mundoro Capital on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Mundoro Capital or generate 0.0% return on investment over 90 days.

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

Mundoro Capital  vs.  IAMGold

Mundoro Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mundoro Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mundoro Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

IAMGold

Risk-Adjusted Performance

8 of 100

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. In spite of very abnormal technical and fundamental indicators, IAMGold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mundoro Capital and IAMGold

The main advantage of trading using opposite Mundoro Capital and IAMGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mundoro Capital 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 Mundoro Capital 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.