Correlation Between IAMGold and Constellium

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

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

Diversification Opportunities for IAMGold and Constellium

-0.28

Correlation Coefficient

IAMGold  Constellium

Very good diversification

The 3 months correlation between IAMGold and Constellium is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv 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 Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of IAMGold i.e., IAMGold and Constellium go up and down completely randomly.

Pair Corralation between IAMGold and Constellium

Considering the 90-day investment horizon IAMGold is expected to generate 0.91 times more return on investment than Constellium. However, IAMGold is 1.1 times less risky than Constellium. It trades about 0.05 of its potential returns per unit of risk. Constellium Nv is currently generating about -0.1 per unit of risk. If you would invest  542.00  in IAMGold on September 13, 2024 and sell it today you would earn a total of  50.00  from holding IAMGold or generate 9.23% return on investment over 90 days.

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

IAMGold  vs.  Constellium Nv

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. Despite nearly unfluctuating basic indicators, IAMGold reported solid returns over the last few months and may actually be approaching a breakup point.

Constellium Nv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellium Nv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with IAMGold and Constellium

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

The idea behind IAMGold and Constellium Nv 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.