Correlation Between Knife River and LiCycle Holdings
Can any of the company-specific risk be diversified away by investing in both Knife River 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 Knife River and LiCycle Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and LiCycle Holdings Corp, you can compare the effects of market volatilities on Knife River 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 Knife River with a short position of LiCycle Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and LiCycle Holdings.
Diversification Opportunities for Knife River and LiCycle Holdings
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knife and LiCycle is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Knife River 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 Knife River 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 Knife River 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 Knife River i.e., Knife River and LiCycle Holdings go up and down completely randomly.
Pair Corralation between Knife River and LiCycle Holdings
Considering the 90-day investment horizon Knife River is expected to generate 0.2 times more return on investment than LiCycle Holdings. However, Knife River is 4.93 times less risky than LiCycle Holdings. It trades about 0.11 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 5,896 in Knife River on September 1, 2024 and sell it today you would earn a total of 4,454 from holding Knife River or generate 75.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. LiCycle Holdings Corp
Performance |
| Timeline |
| Knife River |
| LiCycle Holdings Corp |
Knife River and LiCycle Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and LiCycle Holdings
The main advantage of trading using opposite Knife River and LiCycle Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River 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.| Knife River vs. Park Hotels Resorts | Knife River vs. The Wendys Co | Knife River vs. Dave Busters Entertainment | Knife River vs. Playa Hotels Resorts |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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