Correlation Between LiCycle Holdings and M Large

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

Diversification Opportunities for LiCycle Holdings and M Large

0.0

Correlation Coefficient

LiCycle Holdings  M Large

Pay attention - limited upside

The 3 months correlation between LiCycle and MTCGX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large Cap 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 M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and M Large go up and down completely randomly.

Pair Corralation between LiCycle Holdings and M Large

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to under-perform the M Large. In addition to that, LiCycle Holdings is 7.54 times more volatile than M Large Cap. It trades about -0.04 of its total potential returns per unit of risk. M Large Cap is currently generating about 0.04 per unit of volatility. If you would invest  2,815  in M Large Cap on October 4, 2024 and sell it today you would earn a total of  520.00  from holding M Large Cap or generate 18.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LiCycle Holdings Corp  vs.  M Large Cap

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 uncertain fundamental indicators, LiCycle Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

M Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, M Large 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 M Large

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

The idea behind LiCycle Holdings Corp and M Large Cap 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.