Correlation Between LiCycle Holdings and CRA International
Can any of the company-specific risk be diversified away by investing in both LiCycle Holdings and CRA International 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 LiCycle Holdings and CRA International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LiCycle Holdings Corp and CRA International, you can compare the effects of market volatilities on LiCycle Holdings and CRA International 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 LiCycle Holdings with a short position of CRA International. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiCycle Holdings and CRA International.
Diversification Opportunities for LiCycle Holdings and CRA International
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LiCycle and CRA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and CRA International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRA International and LiCycle Holdings 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 LiCycle Holdings Corp are associated (or correlated) with CRA International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRA International has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and CRA International go up and down completely randomly.
Pair Corralation between LiCycle Holdings and CRA International
Given the investment horizon of 90 days LiCycle Holdings is expected to generate 2.32 times less return on investment than CRA International. In addition to that, LiCycle Holdings is 4.2 times more volatile than CRA International. It trades about 0.0 of its total potential returns per unit of risk. CRA International is currently generating about 0.04 per unit of volatility. If you would invest 17,598 in CRA International on September 5, 2024 and sell it today you would earn a total of 1,566 from holding CRA International or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LiCycle Holdings Corp vs. CRA International
Performance |
| Timeline |
| LiCycle Holdings Corp |
| CRA International |
LiCycle Holdings and CRA International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LiCycle Holdings and CRA International
The main advantage of trading using opposite LiCycle Holdings and CRA International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiCycle Holdings position performs unexpectedly, CRA International 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 CRA International will offset losses from the drop in CRA International's long position.| LiCycle Holdings vs. CRA International | LiCycle Holdings vs. ICF International | LiCycle Holdings vs. Forrester Research | LiCycle Holdings vs. Huron Consulting Group |
| CRA International vs. Franklin Covey | CRA International vs. ICF International | CRA International vs. Huron Consulting Group | CRA International vs. FTI Consulting |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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