Correlation Between IAMGold and Vista Gold

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

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

Diversification Opportunities for IAMGold and Vista Gold

-0.1

Correlation Coefficient

IAMGold  Vista Gold

Good diversification

The 3 months correlation between IAMGold and Vista is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and Vista Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Gold 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 Vista Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Gold has no effect on the direction of IAMGold i.e., IAMGold and Vista Gold go up and down completely randomly.

Pair Corralation between IAMGold and Vista Gold

Considering the 90-day investment horizon IAMGold is expected to generate 1.25 times more return on investment than Vista Gold. However, IAMGold is 1.25 times more volatile than Vista Gold. It trades about 0.01 of its potential returns per unit of risk. Vista Gold is currently generating about -0.13 per unit of risk. If you would invest  523.00  in IAMGold on September 29, 2024 and sell it today you would lose (7.00) from holding IAMGold or give up 1.34% of portfolio value over 90 days.

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

IAMGold  vs.  Vista Gold

IAMGold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IAMGold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IAMGold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Vista Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vista Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly 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 the company investors.

Pair Trading with IAMGold and Vista Gold

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

The idea behind IAMGold and Vista Gold 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.