Correlation Between Lake Resources and Dalaroo Metals
Can any of the company-specific risk be diversified away by investing in both Lake Resources and Dalaroo 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 Lake Resources and Dalaroo Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Resources NL and Dalaroo Metals, you can compare the effects of market volatilities on Lake Resources and Dalaroo 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 Lake Resources with a short position of Dalaroo Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Dalaroo Metals.
Diversification Opportunities for Lake Resources and Dalaroo Metals
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lake and Dalaroo is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Dalaroo Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalaroo Metals and Lake Resources 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 Lake Resources NL are associated (or correlated) with Dalaroo Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalaroo Metals has no effect on the direction of Lake Resources i.e., Lake Resources and Dalaroo Metals go up and down completely randomly.
Pair Corralation between Lake Resources and Dalaroo Metals
Assuming the 90 days trading horizon Lake Resources NL is expected to generate 0.55 times more return on investment than Dalaroo Metals. However, Lake Resources NL is 1.81 times less risky than Dalaroo Metals. It trades about -0.46 of its potential returns per unit of risk. Dalaroo Metals is currently generating about -0.31 per unit of risk. If you would invest 5.20 in Lake Resources NL on September 14, 2024 and sell it today you would lose (1.10) from holding Lake Resources NL or give up 21.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Resources NL vs. Dalaroo Metals
Performance |
| Timeline |
| Lake Resources NL |
| Dalaroo Metals |
Lake Resources and Dalaroo Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Resources and Dalaroo Metals
The main advantage of trading using opposite Lake Resources and Dalaroo Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, Dalaroo 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 Dalaroo Metals will offset losses from the drop in Dalaroo Metals' long position.| Lake Resources vs. Dalaroo Metals | Lake Resources vs. Alto Metals | Lake Resources vs. Patriot Battery Metals | Lake Resources vs. Epsilon Healthcare |
| Dalaroo Metals vs. Queste Communications | Dalaroo Metals vs. Iron Road | Dalaroo Metals vs. EROAD | Dalaroo Metals vs. Home Consortium |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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