Correlation Between Lithium Ionic and Lake Resources
Can any of the company-specific risk be diversified away by investing in both Lithium Ionic and Lake Resources 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 Lithium Ionic and Lake Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Ionic Corp and Lake Resources NL, you can compare the effects of market volatilities on Lithium Ionic and Lake Resources 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 Lithium Ionic with a short position of Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Ionic and Lake Resources.
Diversification Opportunities for Lithium Ionic and Lake Resources
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lithium and Lake is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Ionic Corp and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL and Lithium Ionic 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 Lithium Ionic Corp are associated (or correlated) with Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Lithium Ionic i.e., Lithium Ionic and Lake Resources go up and down completely randomly.
Pair Corralation between Lithium Ionic and Lake Resources
Assuming the 90 days horizon Lithium Ionic is expected to generate 6.43 times less return on investment than Lake Resources. But when comparing it to its historical volatility, Lithium Ionic Corp is 1.71 times less risky than Lake Resources. It trades about 0.01 of its potential returns per unit of risk. Lake Resources NL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4.10 in Lake Resources NL on August 25, 2024 and sell it today you would lose (0.75) from holding Lake Resources NL or give up 18.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Lithium Ionic Corp vs. Lake Resources NL
Performance |
| Timeline |
| Lithium Ionic Corp |
| Lake Resources NL |
Lithium Ionic and Lake Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Ionic and Lake Resources
The main advantage of trading using opposite Lithium Ionic and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Ionic position performs unexpectedly, Lake Resources 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 Lake Resources will offset losses from the drop in Lake Resources' long position.| Lithium Ionic vs. Norra Metals Corp | Lithium Ionic vs. ZincX Resources Corp | Lithium Ionic vs. Nuinsco Resources Limited | Lithium Ionic vs. South Star Battery |
| Lake Resources vs. Sandstorm Gold Ltd | Lake Resources vs. Western Digital | Lake Resources vs. Arrow Electronics | Lake Resources vs. NETGEAR |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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