Correlation Between LiCycle Holdings and Gfl Environmental
Can any of the company-specific risk be diversified away by investing in both LiCycle Holdings and Gfl Environmental 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 Gfl Environmental 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 Gfl Environmental Holdings, you can compare the effects of market volatilities on LiCycle Holdings and Gfl Environmental 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 Gfl Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiCycle Holdings and Gfl Environmental.
Diversification Opportunities for LiCycle Holdings and Gfl Environmental
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LiCycle and Gfl is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental 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 Gfl Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfl Environmental has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and Gfl Environmental go up and down completely randomly.
Pair Corralation between LiCycle Holdings and Gfl Environmental
Given the investment horizon of 90 days LiCycle Holdings Corp is expected to under-perform the Gfl Environmental. In addition to that, LiCycle Holdings is 2.77 times more volatile than Gfl Environmental Holdings. It trades about -0.16 of its total potential returns per unit of risk. Gfl Environmental Holdings is currently generating about 0.09 per unit of volatility. If you would invest 4,315 in Gfl Environmental Holdings on November 29, 2024 and sell it today you would earn a total of 121.00 from holding Gfl Environmental Holdings or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LiCycle Holdings Corp vs. Gfl Environmental Holdings
Performance |
| Timeline |
| LiCycle Holdings Corp |
| Gfl Environmental |
LiCycle Holdings and Gfl Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LiCycle Holdings and Gfl Environmental
The main advantage of trading using opposite LiCycle Holdings and Gfl Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiCycle Holdings position performs unexpectedly, Gfl Environmental 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 Gfl Environmental will offset losses from the drop in Gfl Environmental's long position.| LiCycle Holdings vs. Casella Waste Systems | LiCycle Holdings vs. Perma Fix Environmental Svcs | LiCycle Holdings vs. Montrose Environmental Grp | LiCycle Holdings vs. LanzaTech Global |
| Gfl Environmental vs. Clean Harbors | Gfl Environmental vs. Waste Connections | Gfl Environmental vs. Republic Services | Gfl Environmental vs. Casella Waste Systems |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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