Correlation Between American Creek and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both American Creek and Northern Graphite 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 Northern Graphite 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 Northern Graphite, you can compare the effects of market volatilities on American Creek and Northern Graphite 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 Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Creek and Northern Graphite.
Diversification Opportunities for American Creek and Northern Graphite
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Northern is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Creek Resources and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite 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 Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of American Creek i.e., American Creek and Northern Graphite go up and down completely randomly.
Pair Corralation between American Creek and Northern Graphite
Assuming the 90 days horizon American Creek Resources is expected to generate 0.87 times more return on investment than Northern Graphite. However, American Creek Resources is 1.14 times less risky than Northern Graphite. It trades about 0.06 of its potential returns per unit of risk. Northern Graphite is currently generating about 0.02 per unit of risk. If you would invest 10.00 in American Creek Resources on November 9, 2024 and sell it today you would earn a total of 6.00 from holding American Creek Resources or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Creek Resources vs. Northern Graphite
Performance |
| Timeline |
| American Creek Resources |
| Northern Graphite |
American Creek and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Creek and Northern Graphite
The main advantage of trading using opposite American Creek and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Creek position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite's 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 |
| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Graphite One | Northern Graphite vs. Syrah Resources Limited |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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