Correlation Between American Creek and Gear Energy
Can any of the company-specific risk be diversified away by investing in both American Creek and Gear Energy 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 Gear Energy 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 Gear Energy, you can compare the effects of market volatilities on American Creek and Gear Energy 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 Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Creek and Gear Energy.
Diversification Opportunities for American Creek and Gear Energy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Gear is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Creek Resources and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear Energy 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 Gear Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear Energy has no effect on the direction of American Creek i.e., American Creek and Gear Energy go up and down completely randomly.
Pair Corralation between American Creek and Gear Energy
Assuming the 90 days horizon American Creek Resources is expected to under-perform the Gear Energy. In addition to that, American Creek is 1.83 times more volatile than Gear Energy. It trades about -0.15 of its total potential returns per unit of risk. Gear Energy is currently generating about 0.06 per unit of volatility. If you would invest 64.00 in Gear Energy on January 19, 2024 and sell it today you would earn a total of 2.00 from holding Gear Energy or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Creek Resources vs. Gear Energy
Performance |
| Timeline |
| American Creek Resources |
| Gear Energy |
American Creek and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Creek and Gear Energy
The main advantage of trading using opposite American Creek and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Creek position performs unexpectedly, Gear Energy 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 Gear Energy will offset losses from the drop in Gear Energy'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 |
| Gear Energy vs. Cardinal Energy | Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. Athabasca Oil Corp | Gear Energy vs. Headwater Exploration |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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