Correlation Between LiCycle Holdings and Donegal Group

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

Diversification Opportunities for LiCycle Holdings and Donegal Group

0.13

Correlation Coefficient

LiCycle Holdings  Donegal Group

Average diversification

The 3 months correlation between LiCycle and Donegal is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and Donegal Group A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Donegal Group A 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 Donegal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Donegal Group A has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and Donegal Group go up and down completely randomly.

Pair Corralation between LiCycle Holdings and Donegal Group

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to under-perform the Donegal Group. In addition to that, LiCycle Holdings is 3.27 times more volatile than Donegal Group A. It trades about -0.19 of its total potential returns per unit of risk. Donegal Group A is currently generating about 0.61 per unit of volatility. If you would invest  1,466  in Donegal Group A on December 2, 2024 and sell it today you would earn a total of  283.00  from holding Donegal Group A or generate 19.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

LiCycle Holdings Corp  vs.  Donegal Group A

LiCycle Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days LiCycle Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Donegal Group A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Donegal Group A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Donegal Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LiCycle Holdings and Donegal Group

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

The idea behind LiCycle Holdings Corp and Donegal Group A 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.