Correlation Between IAMGOLD and Kontoor Brands

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

By analyzing existing cross correlation between IAMGOLD P 575 and Kontoor Brands, you can compare the effects of market volatilities on IAMGOLD and Kontoor Brands 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 Kontoor Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAMGOLD and Kontoor Brands.

Diversification Opportunities for IAMGOLD and Kontoor Brands

-0.15

Correlation Coefficient

IAMGOLD  Kontoor Brands

Good diversification

The 3 months correlation between IAMGOLD and Kontoor is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding IAMGOLD P 575 and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands 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 P 575 are associated (or correlated) with Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of IAMGOLD i.e., IAMGOLD and Kontoor Brands go up and down completely randomly.

Pair Corralation between IAMGOLD and Kontoor Brands

Assuming the 90 days trading horizon IAMGOLD P 575 is expected to under-perform the Kontoor Brands. In addition to that, IAMGOLD is 1.05 times more volatile than Kontoor Brands. It trades about -0.16 of its total potential returns per unit of risk. Kontoor Brands is currently generating about 0.08 per unit of volatility. If you would invest  7,851  in Kontoor Brands on September 25, 2024 and sell it today you would earn a total of  884.00  from holding Kontoor Brands or generate 11.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

IAMGOLD P 575  vs.  Kontoor Brands

IAMGOLD P 575

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAMGOLD P 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for IAMGOLD P 575 investors.

Kontoor Brands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Kontoor Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IAMGOLD and Kontoor Brands

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

The idea behind IAMGOLD P 575 and Kontoor Brands 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.