Correlation Between American Creek and Advantage Solutions
Can any of the company-specific risk be diversified away by investing in both American Creek and Advantage Solutions 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 American Creek and Advantage Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Creek Resources and Advantage Solutions, you can compare the effects of market volatilities on American Creek and Advantage Solutions 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 American Creek with a short position of Advantage Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Creek and Advantage Solutions.
Diversification Opportunities for American Creek and Advantage Solutions
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Advantage is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding American Creek Resources and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions and American Creek 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 American Creek Resources are associated (or correlated) with Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of American Creek i.e., American Creek and Advantage Solutions go up and down completely randomly.
Pair Corralation between American Creek and Advantage Solutions
Assuming the 90 days horizon American Creek is expected to generate 1.94 times less return on investment than Advantage Solutions. But when comparing it to its historical volatility, American Creek Resources is 2.36 times less risky than Advantage Solutions. It trades about 0.08 of its potential returns per unit of risk. Advantage Solutions is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4.51 in Advantage Solutions on September 5, 2024 and sell it today you would lose (2.52) from holding Advantage Solutions or give up 55.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.8% |
| Values | Daily Returns |
American Creek Resources vs. Advantage Solutions
Performance |
| Timeline |
| American Creek Resources |
| Advantage Solutions |
American Creek and Advantage Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Creek and Advantage Solutions
The main advantage of trading using opposite American Creek and Advantage Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Creek position performs unexpectedly, Advantage Solutions 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 Advantage Solutions will offset losses from the drop in Advantage Solutions' long position.| American Creek vs. Gold79 Mines | American Creek vs. Arctic Star Exploration | American Creek vs. American Clean Resources | American Creek vs. Arras Minerals Corp |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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