Correlation Between Lake Resources and Blue Moon
Can any of the company-specific risk be diversified away by investing in both Lake Resources and Blue Moon 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 Blue Moon 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 Blue Moon Metals, you can compare the effects of market volatilities on Lake Resources and Blue Moon 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 Blue Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Blue Moon.
Diversification Opportunities for Lake Resources and Blue Moon
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lake and Blue is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Blue Moon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Moon 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 Blue Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Moon Metals has no effect on the direction of Lake Resources i.e., Lake Resources and Blue Moon go up and down completely randomly.
Pair Corralation between Lake Resources and Blue Moon
Assuming the 90 days horizon Lake Resources NL is expected to under-perform the Blue Moon. In addition to that, Lake Resources is 6.65 times more volatile than Blue Moon Metals. It trades about -0.12 of its total potential returns per unit of risk. Blue Moon Metals is currently generating about 0.22 per unit of volatility. If you would invest 24.00 in Blue Moon Metals on September 23, 2024 and sell it today you would earn a total of 1.00 from holding Blue Moon Metals or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Resources NL vs. Blue Moon Metals
Performance |
| Timeline |
| Lake Resources NL |
| Blue Moon Metals |
Lake Resources and Blue Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Resources and Blue Moon
The main advantage of trading using opposite Lake Resources and Blue Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, Blue Moon 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 Blue Moon will offset losses from the drop in Blue Moon's long position.| Lake Resources vs. Stepan Company | Lake Resources vs. Eldorado Gold Corp | Lake Resources vs. Apogee Enterprises | Lake Resources vs. Precision Drilling |
| Blue Moon vs. Altair International Corp | Blue Moon vs. Global Battery Metals | Blue Moon vs. Lake Resources NL | Blue Moon vs. Jourdan Resources |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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