Correlation Between LiCycle Holdings and Virtus Dfa

Can any of the company-specific risk be diversified away by investing in both LiCycle Holdings and Virtus Dfa 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 Virtus Dfa 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 Virtus Dfa 2040, you can compare the effects of market volatilities on LiCycle Holdings and Virtus Dfa 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 Virtus Dfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiCycle Holdings and Virtus Dfa.

Diversification Opportunities for LiCycle Holdings and Virtus Dfa

0.34

Correlation Coefficient

LiCycle Holdings  Virtus Dfa

Weak diversification

The 3 months correlation between LiCycle and Virtus is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and Virtus Dfa 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Dfa 2040 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 Virtus Dfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Dfa 2040 has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and Virtus Dfa go up and down completely randomly.

Pair Corralation between LiCycle Holdings and Virtus Dfa

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to generate 5.55 times more return on investment than Virtus Dfa. However, LiCycle Holdings is 5.55 times more volatile than Virtus Dfa 2040. It trades about -0.01 of its potential returns per unit of risk. Virtus Dfa 2040 is currently generating about -0.11 per unit of risk. If you would invest  236.00  in LiCycle Holdings Corp on October 5, 2024 and sell it today you would lose (57.00) from holding LiCycle Holdings Corp or give up 24.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

LiCycle Holdings Corp  vs.  Virtus Dfa 2040

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.

Virtus Dfa 2040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Dfa 2040 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 Virtus Dfa

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

The idea behind LiCycle Holdings Corp and Virtus Dfa 2040 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.