Correlation Between LiCycle Holdings and State Street

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

Diversification Opportunities for LiCycle Holdings and State Street

-0.16

Correlation Coefficient

LiCycle Holdings  State Street

Good diversification

The 3 months correlation between LiCycle and State is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and State Street Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Premier 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Premier has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and State Street go up and down completely randomly.

Pair Corralation between LiCycle Holdings and State Street

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to generate 1.88 times more return on investment than State Street. However, LiCycle Holdings is 1.88 times more volatile than State Street Premier. It trades about 0.16 of its potential returns per unit of risk. State Street Premier is currently generating about -0.2 per unit of risk. If you would invest  184.00  in LiCycle Holdings Corp on October 6, 2024 and sell it today you would earn a total of  46.00  from holding LiCycle Holdings Corp or generate 25.0% return on investment over 90 days.

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

LiCycle Holdings Corp  vs.  State Street Premier

LiCycle Holdings Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LiCycle Holdings Corp are ranked lower than 3 (%) 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.

State Street Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Street Premier has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with LiCycle Holdings and State Street

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

The idea behind LiCycle Holdings Corp and State Street Premier 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.