Correlation Between American Creek and Dolly Varden
Can any of the company-specific risk be diversified away by investing in both American Creek and Dolly Varden 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 Dolly Varden 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 Dolly Varden Silver, you can compare the effects of market volatilities on American Creek and Dolly Varden 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 Dolly Varden. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Creek and Dolly Varden.
Diversification Opportunities for American Creek and Dolly Varden
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Dolly is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Creek Resources and Dolly Varden Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolly Varden Silver 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 Dolly Varden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolly Varden Silver has no effect on the direction of American Creek i.e., American Creek and Dolly Varden go up and down completely randomly.
Pair Corralation between American Creek and Dolly Varden
Assuming the 90 days horizon American Creek Resources is expected to generate 1.69 times more return on investment than Dolly Varden. However, American Creek is 1.69 times more volatile than Dolly Varden Silver. It trades about 0.02 of its potential returns per unit of risk. Dolly Varden Silver is currently generating about 0.01 per unit of risk. If you would invest 18.00 in American Creek Resources on November 27, 2024 and sell it today you would lose (4.00) from holding American Creek Resources or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Creek Resources vs. Dolly Varden Silver
Performance |
| Timeline |
| American Creek Resources |
| Dolly Varden Silver |
American Creek and Dolly Varden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Creek and Dolly Varden
The main advantage of trading using opposite American Creek and Dolly Varden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Creek position performs unexpectedly, Dolly Varden 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 Dolly Varden will offset losses from the drop in Dolly Varden's long position.| American Creek vs. Teuton Resources Corp | American Creek vs. Kore Mining | American Creek vs. Endurance Gold Corp | American Creek vs. Strikepoint Gold |
| Dolly Varden vs. Defiance Silver Corp | Dolly Varden vs. Metallic Minerals Corp | Dolly Varden vs. Kootenay Silver | Dolly Varden vs. Minaurum Gold |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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