Correlation Between Lake Resources and Sigma Lithium
Can any of the company-specific risk be diversified away by investing in both Lake Resources and Sigma 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 Sigma 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 Sigma Lithium Resources, you can compare the effects of market volatilities on Lake Resources and Sigma 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 Sigma Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Sigma Lithium.
Diversification Opportunities for Lake Resources and Sigma Lithium
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lake and Sigma is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and Sigma Lithium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Lithium Resources 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 Sigma Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Lithium Resources has no effect on the direction of Lake Resources i.e., Lake Resources and Sigma Lithium go up and down completely randomly.
Pair Corralation between Lake Resources and Sigma Lithium
Assuming the 90 days horizon Lake Resources NL is expected to under-perform the Sigma Lithium. In addition to that, Lake Resources is 2.07 times more volatile than Sigma Lithium Resources. It trades about -0.16 of its total potential returns per unit of risk. Sigma Lithium Resources is currently generating about -0.12 per unit of volatility. If you would invest 1,359 in Sigma Lithium Resources on September 13, 2024 and sell it today you would lose (139.00) from holding Sigma Lithium Resources or give up 10.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lake Resources NL vs. Sigma Lithium Resources
Performance |
| Timeline |
| Lake Resources NL |
| Sigma Lithium Resources |
Lake Resources and Sigma Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Resources and Sigma Lithium
The main advantage of trading using opposite Lake Resources and Sigma Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, Sigma 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 Sigma Lithium will offset losses from the drop in Sigma Lithium's long position.| Lake Resources vs. Entegris | Lake Resources vs. EMCOR Group | Lake Resources vs. RBC Bearings Incorporated | Lake Resources vs. MagnaChip Semiconductor |
| Sigma Lithium vs. Piedmont Lithium Ltd | Sigma Lithium vs. Standard Lithium | Sigma Lithium vs. MP Materials Corp | Sigma Lithium vs. Vale SA ADR |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |