Correlation Between American Creek and Brixton Metals

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

Diversification Opportunities for American Creek and Brixton Metals

-0.55

Correlation Coefficient

American Creek  Brixton Metals

Excellent diversification

The 3 months correlation between American and Brixton is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Creek Resources and Brixton Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixton Metals 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 Brixton Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixton Metals has no effect on the direction of American Creek i.e., American Creek and Brixton Metals go up and down completely randomly.

Pair Corralation between American Creek and Brixton Metals

Assuming the 90 days horizon American Creek Resources is expected to generate 1.27 times more return on investment than Brixton Metals. However, American Creek is 1.27 times more volatile than Brixton Metals. It trades about 0.06 of its potential returns per unit of risk. Brixton Metals is currently generating about -0.1 per unit of risk. If you would invest  18.00  in American Creek Resources on September 17, 2024 and sell it today you would earn a total of  2.00  from holding American Creek Resources or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

American Creek Resources  vs.  Brixton Metals

American Creek Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Creek Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, American Creek reported solid returns over the last few months and may actually be approaching a breakup point.

Brixton Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brixton Metals 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with American Creek and Brixton Metals

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

The idea behind American Creek Resources and Brixton Metals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.