Correlation Between GoGold Resources and American Creek
Can any of the company-specific risk be diversified away by investing in both GoGold 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 GoGold 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 GoGold Resources and American Creek Resources, you can compare the effects of market volatilities on GoGold 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 GoGold Resources with a short position of American Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoGold Resources and American Creek.
Diversification Opportunities for GoGold Resources and American Creek
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GoGold and American is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GoGold 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 GoGold 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 GoGold 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 GoGold Resources i.e., GoGold Resources and American Creek go up and down completely randomly.
Pair Corralation between GoGold Resources and American Creek
Assuming the 90 days trading horizon GoGold Resources is expected to under-perform the American Creek. But the stock apears to be less risky and, when comparing its historical volatility, GoGold Resources is 1.83 times less risky than American Creek. The stock trades about -0.02 of its potential returns per unit of risk. The American Creek Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13.00 in American Creek Resources on September 3, 2024 and sell it today you would earn a total of 17.00 from holding American Creek Resources or generate 130.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoGold Resources vs. American Creek Resources
Performance |
| Timeline |
| GoGold Resources |
| American Creek Resources |
GoGold Resources and American Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoGold Resources and American Creek
The main advantage of trading using opposite GoGold Resources and American Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoGold 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.| GoGold Resources vs. Algoma Steel Group | GoGold Resources vs. Champion Iron | GoGold Resources vs. International Zeolite Corp | GoGold Resources vs. European Residential Real |
| American Creek vs. Teuton Resources Corp | American Creek vs. Kore Mining | American Creek vs. Endurance Gold Corp | American Creek vs. Strikepoint 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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