Correlation Between Q Gold and IAMGold

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

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

Diversification Opportunities for Q Gold and IAMGold

-0.15

Correlation Coefficient

Q Gold  IAMGold

Good diversification

The 3 months correlation between QGR and IAMGold is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Q Gold Resources and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold and Q Gold 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 Q Gold Resources 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 Q Gold i.e., Q Gold and IAMGold go up and down completely randomly.

Pair Corralation between Q Gold and IAMGold

Assuming the 90 days horizon Q Gold Resources is expected to generate 5.72 times more return on investment than IAMGold. However, Q Gold is 5.72 times more volatile than IAMGold. It trades about 0.1 of its potential returns per unit of risk. IAMGold is currently generating about 0.06 per unit of risk. If you would invest  3.00  in Q Gold Resources on October 4, 2024 and sell it today you would earn a total of  11.00  from holding Q Gold Resources or generate 366.67% return on investment over 90 days.

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

Q Gold Resources  vs.  IAMGold

Q Gold Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

IAMGold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IAMGold are ranked lower than 4 (%) 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 Q Gold and IAMGold

The main advantage of trading using opposite Q Gold and IAMGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q Gold 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 Q Gold Resources 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 Transaction History module to view history of all your transactions and understand their impact on performance.