Correlation Between American Creek and Western Alaska

Can any of the company-specific risk be diversified away by investing in both American Creek and Western Alaska 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 Western Alaska 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 Western Alaska Minerals, you can compare the effects of market volatilities on American Creek and Western Alaska 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 Western Alaska. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Creek and Western Alaska.

Diversification Opportunities for American Creek and Western Alaska

-0.05

Correlation Coefficient

American Creek  Western Alaska

Good diversification

The 3 months correlation between American and Western is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding American Creek Resources and Western Alaska Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alaska Minerals 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 Western Alaska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alaska Minerals has no effect on the direction of American Creek i.e., American Creek and Western Alaska go up and down completely randomly.

Pair Corralation between American Creek and Western Alaska

Assuming the 90 days horizon American Creek Resources is expected to under-perform the Western Alaska. But the otc stock apears to be less risky and, when comparing its historical volatility, American Creek Resources is 1.08 times less risky than Western Alaska. The otc stock trades about -0.15 of its potential returns per unit of risk. The Western Alaska Minerals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Western Alaska Minerals on November 28, 2024 and sell it today you would lose (1.00) from holding Western Alaska Minerals or give up 2.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

American Creek Resources  vs.  Western Alaska Minerals

American Creek Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Creek Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Western Alaska Minerals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Alaska Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Western Alaska reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Creek and Western Alaska

The main advantage of trading using opposite American Creek and Western Alaska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Creek position performs unexpectedly, Western Alaska 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 Western Alaska will offset losses from the drop in Western Alaska's long position.

The idea behind American Creek Resources and Western Alaska Minerals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.