Correlation Between LiCycle Holdings and Ecofin Sustainable

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

Diversification Opportunities for LiCycle Holdings and Ecofin Sustainable

0.37

Correlation Coefficient

LiCycle Holdings  Ecofin Sustainable

Weak diversification

The 3 months correlation between LiCycle and Ecofin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and Ecofin Sustainable And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Sustainable And 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 Ecofin Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Sustainable And has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and Ecofin Sustainable go up and down completely randomly.

Pair Corralation between LiCycle Holdings and Ecofin Sustainable

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to under-perform the Ecofin Sustainable. In addition to that, LiCycle Holdings is 12.0 times more volatile than Ecofin Sustainable And. It trades about -0.02 of its total potential returns per unit of risk. Ecofin Sustainable And is currently generating about 0.04 per unit of volatility. If you would invest  1,057  in Ecofin Sustainable And on October 5, 2024 and sell it today you would earn a total of  150.00  from holding Ecofin Sustainable And or generate 14.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.78%
Values	Daily Returns

LiCycle Holdings Corp  vs.  Ecofin Sustainable And

LiCycle Holdings Corp

Risk-Adjusted Performance

3 of 100

Very Weak

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

Ecofin Sustainable And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecofin Sustainable And has generated negative risk-adjusted returns adding no value to fund investors. Despite latest inconsistent performance, the Fund's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Pair Trading with LiCycle Holdings and Ecofin Sustainable

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

The idea behind LiCycle Holdings Corp and Ecofin Sustainable And 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.