Correlation Between Hawsons Iron and Lake Resources
Can any of the company-specific risk be diversified away by investing in both Hawsons Iron and Lake Resources 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 Hawsons Iron and Lake Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawsons Iron and Lake Resources NL, you can compare the effects of market volatilities on Hawsons Iron and Lake Resources 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 Hawsons Iron with a short position of Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawsons Iron and Lake Resources.
Diversification Opportunities for Hawsons Iron and Lake Resources
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hawsons and Lake is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hawsons Iron and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL and Hawsons Iron 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 Hawsons Iron are associated (or correlated) with Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Hawsons Iron i.e., Hawsons Iron and Lake Resources go up and down completely randomly.
Pair Corralation between Hawsons Iron and Lake Resources
Assuming the 90 days trading horizon Hawsons Iron is expected to generate 1.31 times more return on investment than Lake Resources. However, Hawsons Iron is 1.31 times more volatile than Lake Resources NL. It trades about 0.08 of its potential returns per unit of risk. Lake Resources NL is currently generating about -0.69 per unit of risk. If you would invest 2.10 in Hawsons Iron on August 27, 2024 and sell it today you would earn a total of 0.10 from holding Hawsons Iron or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawsons Iron vs. Lake Resources NL
Performance |
| Timeline |
| Hawsons Iron |
| Lake Resources NL |
Hawsons Iron and Lake Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawsons Iron and Lake Resources
The main advantage of trading using opposite Hawsons Iron and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawsons Iron position performs unexpectedly, Lake Resources 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 Lake Resources will offset losses from the drop in Lake Resources' long position.| Hawsons Iron vs. Northern Star Resources | Hawsons Iron vs. Evolution Mining | Hawsons Iron vs. Bluescope Steel | Hawsons Iron vs. Sandfire Resources NL |
| Lake Resources vs. My Foodie Box | Lake Resources vs. Sky Metals | Lake Resources vs. Bluescope Steel | Lake Resources vs. Hawsons Iron |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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