Correlation Between Vaalco Energy and IAMGold

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

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

Diversification Opportunities for Vaalco Energy and IAMGold

0.32

Correlation Coefficient

Vaalco Energy  IAMGold

Weak diversification

The 3 months correlation between Vaalco and IAMGold is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vaalco Energy and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold and Vaalco Energy 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 Vaalco Energy 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 Vaalco Energy i.e., Vaalco Energy and IAMGold go up and down completely randomly.

Pair Corralation between Vaalco Energy and IAMGold

Considering the 90-day investment horizon Vaalco Energy is expected to generate 0.9 times more return on investment than IAMGold. However, Vaalco Energy is 1.11 times less risky than IAMGold. It trades about 0.07 of its potential returns per unit of risk. IAMGold is currently generating about -0.02 per unit of risk. If you would invest  325.00  in Vaalco Energy on May 6, 2025 and sell it today you would earn a total of  35.00  from holding Vaalco Energy or generate 10.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Vaalco Energy  vs.  IAMGold

Vaalco Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vaalco Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Vaalco Energy showed solid returns over the last few months and may actually be approaching a breakup point.

IAMGold

Risk-Adjusted Performance

Very Weak

Over the last 90 days IAMGold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IAMGold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vaalco Energy and IAMGold

The main advantage of trading using opposite Vaalco Energy and IAMGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaalco Energy 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 Vaalco Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.