Correlation Between Lake Resources and Green Technology
Can any of the company-specific risk be diversified away by investing in both Lake Resources and Green Technology 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 Green Technology 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 Green Technology Metals, you can compare the effects of market volatilities on Lake Resources and Green Technology 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 Green Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Green Technology.
Diversification Opportunities for Lake Resources and Green Technology
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lake and Green is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Green Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Technology 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 Green Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Technology Metals has no effect on the direction of Lake Resources i.e., Lake Resources and Green Technology go up and down completely randomly.
Pair Corralation between Lake Resources and Green Technology
Assuming the 90 days horizon Lake Resources NL is expected to under-perform the Green Technology. In addition to that, Lake Resources is 2.1 times more volatile than Green Technology Metals. It trades about -0.22 of its total potential returns per unit of risk. Green Technology Metals is currently generating about -0.44 per unit of volatility. If you would invest 6.81 in Green Technology Metals on August 29, 2024 and sell it today you would lose (2.00) from holding Green Technology Metals or give up 29.37% 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. Green Technology Metals
Performance |
| Timeline |
| Lake Resources NL |
| Green Technology Metals |
Lake Resources and Green Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Resources and Green Technology
The main advantage of trading using opposite Lake Resources and Green Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, Green Technology 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 Green Technology will offset losses from the drop in Green Technology's long position.| Lake Resources vs. Emerson Electric | Lake Resources vs. Cementos Pacasmayo SAA | Lake Resources vs. Willamette Valley Vineyards | Lake Resources vs. Topbuild Corp |
| Green Technology vs. Lake Resources NL | Green Technology vs. Arizona Lithium Limited | Green Technology vs. Sayona Mining Limited | Green Technology vs. Argosy Minerals Limited |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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