Correlation Between LiCycle Holdings and SPACE
Can any of the company-specific risk be diversified away by investing in both LiCycle Holdings and SPACE 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 SPACE 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 SPACE, you can compare the effects of market volatilities on LiCycle Holdings and SPACE 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 SPACE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiCycle Holdings and SPACE.
Diversification Opportunities for LiCycle Holdings and SPACE
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LiCycle and SPACE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and SPACE go up and down completely randomly.
Pair Corralation between LiCycle Holdings and SPACE
Given the investment horizon of 90 days LiCycle Holdings Corp is expected to under-perform the SPACE. In addition to that, LiCycle Holdings is 1.95 times more volatile than SPACE. It trades about -0.02 of its total potential returns per unit of risk. SPACE is currently generating about 0.0 per unit of volatility. 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 |
LiCycle Holdings Corp vs. SPACE
Performance |
| Timeline |
| LiCycle Holdings Corp |
| SPACE |
LiCycle Holdings and SPACE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LiCycle Holdings and SPACE
The main advantage of trading using opposite LiCycle Holdings and SPACE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiCycle Holdings position performs unexpectedly, SPACE 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 SPACE will offset losses from the drop in SPACE'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 |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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