Correlation Between Advance Gold and American Eagle

Can any of the company-specific risk be diversified away by investing in both Advance Gold and American Eagle 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 Advance Gold and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advance Gold Corp and American Eagle Gold, you can compare the effects of market volatilities on Advance Gold and American Eagle 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 Advance Gold with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Gold and American Eagle.

Diversification Opportunities for Advance Gold and American Eagle

0.0

Correlation Coefficient

Advance Gold  American Eagle

Pay attention - limited upside

The 3 months correlation between Advance and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Advance Gold Corp and American Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Gold and Advance Gold 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 Advance Gold Corp are associated (or correlated) with American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Gold has no effect on the direction of Advance Gold i.e., Advance Gold and American Eagle go up and down completely randomly.

Pair Corralation between Advance Gold and American Eagle

If you would invest  30.00  in American Eagle Gold on September 3, 2024 and sell it today you would earn a total of  37.00  from holding American Eagle Gold or generate 123.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Advance Gold Corp  vs.  American Eagle Gold

Advance Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advance Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Advance Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

American Eagle Gold

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Eagle Gold are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, American Eagle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advance Gold and American Eagle

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

The idea behind Advance Gold Corp and American Eagle Gold 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.