Correlation Between LiCycle Holdings and Ft 7927

Can any of the company-specific risk be diversified away by investing in both LiCycle Holdings and Ft 7927 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 Ft 7927 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 Ft 7927 Corporate, you can compare the effects of market volatilities on LiCycle Holdings and Ft 7927 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 Ft 7927. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiCycle Holdings and Ft 7927.

Diversification Opportunities for LiCycle Holdings and Ft 7927

0.64

Correlation Coefficient

LiCycle Holdings  Ft 7927

Poor diversification

The 3 months correlation between LiCycle and FCOLDX is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and Ft 7927 Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ft 7927 Corporate 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 Ft 7927. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ft 7927 Corporate has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and Ft 7927 go up and down completely randomly.

Pair Corralation between LiCycle Holdings and Ft 7927

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to under-perform the Ft 7927. But the stock apears to be less risky and, when comparing its historical volatility, LiCycle Holdings Corp is 2.2 times less risky than Ft 7927. The stock trades about -0.03 of its potential returns per unit of risk. The Ft 7927 Corporate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  24,185  in Ft 7927 Corporate on October 5, 2024 and sell it today you would lose (12,697) from holding Ft 7927 Corporate or give up 52.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.85%
Values	Daily Returns

LiCycle Holdings Corp  vs.  Ft 7927 Corporate

LiCycle Holdings Corp

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ft 7927 Corporate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ft 7927 Corporate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ft 7927 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LiCycle Holdings and Ft 7927

The main advantage of trading using opposite LiCycle Holdings and Ft 7927 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiCycle Holdings position performs unexpectedly, Ft 7927 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 Ft 7927 will offset losses from the drop in Ft 7927's long position.

The idea behind LiCycle Holdings Corp and Ft 7927 Corporate 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.