Correlation Between American Creek and Golden Goliath
Can any of the company-specific risk be diversified away by investing in both American Creek and Golden Goliath 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 Golden Goliath 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 Golden Goliath Resources, you can compare the effects of market volatilities on American Creek and Golden Goliath 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 Golden Goliath. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Creek and Golden Goliath.
Diversification Opportunities for American Creek and Golden Goliath
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Golden is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding American Creek Resources and Golden Goliath Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Goliath Resources 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 Golden Goliath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Goliath Resources has no effect on the direction of American Creek i.e., American Creek and Golden Goliath go up and down completely randomly.
Pair Corralation between American Creek and Golden Goliath
Assuming the 90 days horizon American Creek Resources is expected to generate 0.79 times more return on investment than Golden Goliath. However, American Creek Resources is 1.26 times less risky than Golden Goliath. It trades about 0.02 of its potential returns per unit of risk. Golden Goliath Resources is currently generating about -0.21 per unit of risk. If you would invest 32.00 in American Creek Resources on August 30, 2024 and sell it today you would earn a total of 0.00 from holding American Creek Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Creek Resources vs. Golden Goliath Resources
Performance |
| Timeline |
| American Creek Resources |
| Golden Goliath Resources |
American Creek and Golden Goliath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Creek and Golden Goliath
The main advantage of trading using opposite American Creek and Golden Goliath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Creek position performs unexpectedly, Golden Goliath 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 Golden Goliath will offset losses from the drop in Golden Goliath'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 |
| Golden Goliath vs. Minera Alamos | Golden Goliath vs. Klondike Gold Corp | Golden Goliath vs. Metallic Minerals Corp | Golden Goliath vs. Teuton Resources Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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