Correlation Between Lake Resources and Global Battery
Can any of the company-specific risk be diversified away by investing in both Lake Resources and Global Battery 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 Global Battery 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 Global Battery Metals, you can compare the effects of market volatilities on Lake Resources and Global Battery 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 Global Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Global Battery.
Diversification Opportunities for Lake Resources and Global Battery
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lake and Global is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Global Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Battery 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 Global Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Battery Metals has no effect on the direction of Lake Resources i.e., Lake Resources and Global Battery go up and down completely randomly.
Pair Corralation between Lake Resources and Global Battery
Assuming the 90 days horizon Lake Resources is expected to generate 1.59 times less return on investment than Global Battery. But when comparing it to its historical volatility, Lake Resources NL is 2.22 times less risky than Global Battery. It trades about 0.15 of its potential returns per unit of risk. Global Battery Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1.60 in Global Battery Metals on October 25, 2024 and sell it today you would earn a total of 0.19 from holding Global Battery Metals or generate 11.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Resources NL vs. Global Battery Metals
Performance |
| Timeline |
| Lake Resources NL |
| Global Battery Metals |
Lake Resources and Global Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Resources and Global Battery
The main advantage of trading using opposite Lake Resources and Global Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, Global Battery 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 Global Battery will offset losses from the drop in Global Battery's long position.| Lake Resources vs. TFI International | Lake Resources vs. Proficient Auto Logistics, | Lake Resources vs. Cincinnati Financial | Lake Resources vs. Sunlands Technology Group |
| Global Battery vs. Altair International Corp | Global Battery vs. Lake Resources NL | Global Battery vs. Jourdan Resources | Global Battery vs. Lomiko Metals |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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