Correlation Between IAMGold and Hycroft Mining

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

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

Diversification Opportunities for IAMGold and Hycroft Mining

0.07

Correlation Coefficient

IAMGold  Hycroft Mining

Significant diversification

The 3 months correlation between IAMGold and Hycroft is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and Hycroft Mining Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hycroft Mining Holding 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 Hycroft Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hycroft Mining Holding has no effect on the direction of IAMGold i.e., IAMGold and Hycroft Mining go up and down completely randomly.

Pair Corralation between IAMGold and Hycroft Mining

Considering the 90-day investment horizon IAMGold is expected to generate 0.36 times more return on investment than Hycroft Mining. However, IAMGold is 2.79 times less risky than Hycroft Mining. It trades about 0.07 of its potential returns per unit of risk. Hycroft Mining Holding is currently generating about 0.02 per unit of risk. If you would invest  472.00  in IAMGold on August 10, 2024 and sell it today you would earn a total of  60.00  from holding IAMGold or generate 12.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

IAMGold  vs.  Hycroft Mining Holding

IAMGold

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IAMGold are ranked lower than 5 (%) 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.

Hycroft Mining Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hycroft Mining Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Hycroft Mining may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IAMGold and Hycroft Mining

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

The idea behind IAMGold and Hycroft Mining Holding 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.