Correlation Between IAMGold and Medical Facilities

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

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

Diversification Opportunities for IAMGold and Medical Facilities

0.22

Correlation Coefficient

IAMGold  Medical Facilities

Modest diversification

The 3 months correlation between IAMGold and Medical is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of IAMGold i.e., IAMGold and Medical Facilities go up and down completely randomly.

Pair Corralation between IAMGold and Medical Facilities

Assuming the 90 days trading horizon IAMGold is expected to generate 2.96 times more return on investment than Medical Facilities. However, IAMGold is 2.96 times more volatile than Medical Facilities. It trades about -0.11 of its potential returns per unit of risk. Medical Facilities is currently generating about -0.72 per unit of risk. If you would invest  1,013  in IAMGold on May 4, 2025 and sell it today you would lose (67.00) from holding IAMGold or give up 6.61% of portfolio value over 90 days.

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

IAMGold  vs.  Medical Facilities

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. In spite of very healthy technical and fundamental indicators, IAMGold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Medical Facilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medical Facilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Medical Facilities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IAMGold and Medical Facilities

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

The idea behind IAMGold and Medical Facilities 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.