Correlation Between LiCycle Holdings and Citizens Financial

Can any of the company-specific risk be diversified away by investing in both LiCycle Holdings and Citizens 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 Citizens 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 Citizens Financial Corp, you can compare the effects of market volatilities on LiCycle Holdings and Citizens 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiCycle Holdings and Citizens Financial.

Diversification Opportunities for LiCycle Holdings and Citizens Financial

-0.21

Correlation Coefficient

LiCycle Holdings  Citizens Financial

Very good diversification

The 3 months correlation between LiCycle and Citizens is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and Citizens Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Corp 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Corp has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and Citizens Financial go up and down completely randomly.

Pair Corralation between LiCycle Holdings and Citizens Financial

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to under-perform the Citizens Financial. In addition to that, LiCycle Holdings is 2.89 times more volatile than Citizens Financial Corp. It trades about -0.03 of its total potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.04 per unit of volatility. If you would invest  1,804  in Citizens Financial Corp on October 4, 2024 and sell it today you would earn a total of  621.00  from holding Citizens Financial Corp or generate 34.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	69.96%
Values	Daily Returns

LiCycle Holdings Corp  vs.  Citizens Financial Corp

LiCycle Holdings Corp

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LiCycle Holdings Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, LiCycle Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Citizens Financial Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Citizens Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LiCycle Holdings and Citizens Financial

The main advantage of trading using opposite LiCycle Holdings and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiCycle Holdings position performs unexpectedly, Citizens 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.

The idea behind LiCycle Holdings Corp and Citizens Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..