Correlation Between Lake Resources and Core Lithium
Can any of the company-specific risk be diversified away by investing in both Lake Resources and Core Lithium 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 Core Lithium 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 Core Lithium, you can compare the effects of market volatilities on Lake Resources and Core Lithium 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 Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Core Lithium.
Diversification Opportunities for Lake Resources and Core Lithium
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lake and Core is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium 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 Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Lake Resources i.e., Lake Resources and Core Lithium go up and down completely randomly.
Pair Corralation between Lake Resources and Core Lithium
Assuming the 90 days horizon Lake Resources NL is expected to under-perform the Core Lithium. But the otc stock apears to be less risky and, when comparing its historical volatility, Lake Resources NL is 1.09 times less risky than Core Lithium. The otc stock trades about -0.04 of its potential returns per unit of risk. The Core Lithium is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 82.00 in Core Lithium on August 31, 2024 and sell it today you would lose (75.80) from holding Core Lithium or give up 92.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Resources NL vs. Core Lithium
Performance |
| Timeline |
| Lake Resources NL |
| Core Lithium |
Lake Resources and Core Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Resources and Core Lithium
The main advantage of trading using opposite Lake Resources and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, Core Lithium 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 Core Lithium will offset losses from the drop in Core Lithium's long position.| Lake Resources vs. Liontown Resources Limited | Lake Resources vs. ATT Inc | Lake Resources vs. Merck Company | Lake Resources vs. Walt Disney |
| Core Lithium vs. Liontown Resources Limited | Core Lithium vs. ATT Inc | Core Lithium vs. Merck Company | Core Lithium vs. Walt Disney |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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