Correlation Between LiCycle Holdings and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both LiCycle Holdings and Cincinnati Financial 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 Cincinnati Financial 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 Cincinnati Financial, you can compare the effects of market volatilities on LiCycle Holdings and Cincinnati Financial 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 Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiCycle Holdings and Cincinnati Financial.
Diversification Opportunities for LiCycle Holdings and Cincinnati Financial
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LiCycle and Cincinnati is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial 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 Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and Cincinnati Financial go up and down completely randomly.
Pair Corralation between LiCycle Holdings and Cincinnati Financial
Given the investment horizon of 90 days LiCycle Holdings Corp is expected to under-perform the Cincinnati Financial. In addition to that, LiCycle Holdings is 5.59 times more volatile than Cincinnati Financial. It trades about -0.19 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about 0.03 per unit of volatility. If you would invest 14,228 in Cincinnati Financial on December 30, 2024 and sell it today you would earn a total of 327.00 from holding Cincinnati Financial or generate 2.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 64.52% |
Values | Daily Returns |
LiCycle Holdings Corp vs. Cincinnati Financial
Performance |
Timeline |
LiCycle Holdings Corp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Cincinnati Financial |
LiCycle Holdings and Cincinnati Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LiCycle Holdings and Cincinnati Financial
The main advantage of trading using opposite LiCycle Holdings and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiCycle Holdings position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial'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 |
Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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