Correlation Between Lake Resources and American West
Can any of the company-specific risk be diversified away by investing in both Lake Resources and American West 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 American West 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 American West Metals, you can compare the effects of market volatilities on Lake Resources and American West 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 American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and American West.
Diversification Opportunities for Lake Resources and American West
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lake and American is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL and American West Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American West 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 American West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American West Metals has no effect on the direction of Lake Resources i.e., Lake Resources and American West go up and down completely randomly.
Pair Corralation between Lake Resources and American West
Assuming the 90 days horizon Lake Resources is expected to generate 2.16 times less return on investment than American West. But when comparing it to its historical volatility, Lake Resources NL is 3.05 times less risky than American West. It trades about 0.18 of its potential returns per unit of risk. American West Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2.00 in American West Metals on September 1, 2025 and sell it today you would earn a total of 1.60 from holding American West Metals or generate 80.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Lake Resources NL vs. American West Metals
Performance |
| Timeline |
| Lake Resources NL |
| American West Metals |
Lake Resources and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Resources and American West
The main advantage of trading using opposite Lake Resources and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources position performs unexpectedly, American West 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 American West will offset losses from the drop in American West's long position.| Lake Resources vs. Fernhill Beverage | Lake Resources vs. Koios Beverage Corp | Lake Resources vs. Starwin Media Holdings | Lake Resources vs. CanSino Biologics |
| American West vs. BHP Group Limited | American West vs. Rio Tinto Group | American West vs. BHP Group Limited | American West vs. Rio Tinto Group |
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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