Correlation Between IGO and Lake Resources
Can any of the company-specific risk be diversified away by investing in both IGO 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 IGO and Lake Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGO Limited and Lake Resources NL, you can compare the effects of market volatilities on IGO 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 IGO with a short position of Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Lake Resources.
Diversification Opportunities for IGO and Lake Resources
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IGO and Lake is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited 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 IGO 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 IGO Limited 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 IGO i.e., IGO and Lake Resources go up and down completely randomly.
Pair Corralation between IGO and Lake Resources
Assuming the 90 days horizon IGO Limited is expected to under-perform the Lake Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 2.62 times less risky than Lake Resources. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Lake Resources NL is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Lake Resources NL on September 12, 2024 and sell it today you would lose (16.50) from holding Lake Resources NL or give up 86.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IGO Limited vs. Lake Resources NL
Performance |
| Timeline |
| IGO Limited |
| Lake Resources NL |
IGO and Lake Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGO and Lake Resources
The main advantage of trading using opposite IGO and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGO 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.| IGO vs. Qubec Nickel Corp | IGO vs. Nickel Mines Limited | IGO vs. Mineral Resources Limited | IGO vs. Surge Copper Corp |
| Lake Resources vs. Qubec Nickel Corp | Lake Resources vs. IGO Limited | Lake Resources vs. Focus Graphite | Lake Resources vs. Mineral Res |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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