Correlation Between Aurania Resources and American Creek
Can any of the company-specific risk be diversified away by investing in both Aurania Resources and American Creek 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 Aurania Resources and American Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurania Resources and American Creek Resources, you can compare the effects of market volatilities on Aurania Resources and American Creek 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 Aurania Resources with a short position of American Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurania Resources and American Creek.
Diversification Opportunities for Aurania Resources and American Creek
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurania and American is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Aurania Resources and American Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Creek Resources and Aurania Resources 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 Aurania Resources are associated (or correlated) with American Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Creek Resources has no effect on the direction of Aurania Resources i.e., Aurania Resources and American Creek go up and down completely randomly.
Pair Corralation between Aurania Resources and American Creek
Assuming the 90 days horizon Aurania Resources is expected to under-perform the American Creek. In addition to that, Aurania Resources is 1.36 times more volatile than American Creek Resources. It trades about -0.2 of its total potential returns per unit of risk. American Creek Resources is currently generating about -0.13 per unit of volatility. If you would invest 19.00 in American Creek Resources on October 23, 2024 and sell it today you would lose (2.00) from holding American Creek Resources or give up 10.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurania Resources vs. American Creek Resources
Performance |
| Timeline |
| Aurania Resources |
| American Creek Resources |
Aurania Resources and American Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurania Resources and American Creek
The main advantage of trading using opposite Aurania Resources and American Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurania Resources position performs unexpectedly, American Creek 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 American Creek will offset losses from the drop in American Creek's long position.| Aurania Resources vs. Compass Diversified Holdings | Aurania Resources vs. Summit Hotel Properties | Aurania Resources vs. AG Mortgage Investment | Aurania Resources vs. Gladstone Investment |
| American Creek vs. Gold79 Mines | American Creek vs. Arctic Star Exploration | American Creek vs. American Clean Resources | American Creek vs. Arras Minerals 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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