Correlation Between Lake Resources and Bravada Gold
Can any of the company-specific risk be diversified away by investing in both Lake Resources and Bravada Gold 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 Bravada Gold 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 Bravada Gold, you can compare the effects of market volatilities on Lake Resources and Bravada Gold 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 Bravada Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Bravada Gold.
Diversification Opportunities for Lake Resources and Bravada Gold
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lake and Bravada is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Bravada Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Gold 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 Bravada Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Gold has no effect on the direction of Lake Resources i.e., Lake Resources and Bravada Gold go up and down completely randomly.
Pair Corralation between Lake Resources and Bravada Gold
Assuming the 90 days horizon Lake Resources NL is expected to under-perform the Bravada Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, Lake Resources NL is 3.07 times less risky than Bravada Gold. The otc stock trades about -0.2 of its potential returns per unit of risk. The Bravada Gold is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2.50 in Bravada Gold on August 28, 2024 and sell it today you would lose (0.95) from holding Bravada Gold or give up 38.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Resources NL vs. Bravada Gold
Performance |
| Timeline |
| Lake Resources NL |
| Bravada Gold |
Lake Resources and Bravada Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Resources and Bravada Gold
The main advantage of trading using opposite Lake Resources and Bravada Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, Bravada Gold 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 Bravada Gold will offset losses from the drop in Bravada Gold's long position.The idea behind Lake Resources NL and Bravada 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.| Bravada Gold vs. Ascendant Resources | Bravada Gold vs. Cantex Mine Development | Bravada Gold vs. Amarc Resources | Bravada Gold vs. Sterling Metals Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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