Correlation Between Citigroup and LiCycle Holdings
Can any of the company-specific risk be diversified away by investing in both Citigroup and LiCycle Holdings 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 Citigroup and LiCycle Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and LiCycle Holdings Corp, you can compare the effects of market volatilities on Citigroup and LiCycle Holdings 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 Citigroup with a short position of LiCycle Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and LiCycle Holdings.
Diversification Opportunities for Citigroup and LiCycle Holdings
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and LiCycle is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LiCycle Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiCycle Holdings Corp and Citigroup 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 Citigroup are associated (or correlated) with LiCycle Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiCycle Holdings Corp has no effect on the direction of Citigroup i.e., Citigroup and LiCycle Holdings go up and down completely randomly.
Pair Corralation between Citigroup and LiCycle Holdings
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.36 times less return on investment than LiCycle Holdings. But when comparing it to its historical volatility, Citigroup is 6.15 times less risky than LiCycle Holdings. It trades about 0.25 of its potential returns per unit of risk. LiCycle Holdings Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 209.00 in LiCycle Holdings Corp on August 28, 2024 and sell it today you would earn a total of 25.00 from holding LiCycle Holdings Corp or generate 11.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. LiCycle Holdings Corp
Performance |
| Timeline |
| Citigroup |
| LiCycle Holdings Corp |
Citigroup and LiCycle Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and LiCycle Holdings
The main advantage of trading using opposite Citigroup and LiCycle Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, LiCycle Holdings 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 LiCycle Holdings will offset losses from the drop in LiCycle Holdings' long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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