Correlation Between SPACE and LiCycle Holdings
Can any of the company-specific risk be diversified away by investing in both SPACE 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 SPACE and LiCycle Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and LiCycle Holdings Corp, you can compare the effects of market volatilities on SPACE 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 SPACE with a short position of LiCycle Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and LiCycle Holdings.
Diversification Opportunities for SPACE and LiCycle Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPACE and LiCycle is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SPACE 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 SPACE 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 SPACE 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 SPACE i.e., SPACE and LiCycle Holdings go up and down completely randomly.
Pair Corralation between SPACE and LiCycle Holdings
Assuming the 90 days horizon SPACE is expected to generate 0.51 times more return on investment than LiCycle Holdings. However, SPACE is 1.95 times less risky than LiCycle Holdings. It trades about 0.0 of its potential returns per unit of risk. LiCycle Holdings Corp is currently generating about -0.02 per unit of risk. If you would invest 71.00 in SPACE on September 1, 2024 and sell it today you would lose (15.00) from holding SPACE or give up 21.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 54.28% |
| Values | Daily Returns |
SPACE vs. LiCycle Holdings Corp
Performance |
| Timeline |
| SPACE |
| LiCycle Holdings Corp |
SPACE and LiCycle Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and LiCycle Holdings
The main advantage of trading using opposite SPACE and LiCycle Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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.The idea behind SPACE and LiCycle Holdings Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LiCycle Holdings vs. Casella Waste Systems | LiCycle Holdings vs. Perma Fix Environmental Svcs | LiCycle Holdings vs. Montrose Environmental Grp | LiCycle Holdings vs. LanzaTech Global |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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