Correlation Between LiCycle Holdings and Gabelli Healthcare

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

Diversification Opportunities for LiCycle Holdings and Gabelli Healthcare

0.57

Correlation Coefficient

LiCycle Holdings  Gabelli Healthcare

Very weak diversification

The 3 months correlation between LiCycle and Gabelli is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and The Gabelli Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Gabelli Healthcare 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 Gabelli Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Gabelli Healthcare has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and Gabelli Healthcare go up and down completely randomly.

Pair Corralation between LiCycle Holdings and Gabelli Healthcare

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to under-perform the Gabelli Healthcare. In addition to that, LiCycle Holdings is 9.85 times more volatile than The Gabelli Healthcare. It trades about -0.04 of its total potential returns per unit of risk. The Gabelli Healthcare is currently generating about -0.02 per unit of volatility. If you would invest  1,214  in The Gabelli Healthcare on October 20, 2024 and sell it today you would lose (103.00) from holding The Gabelli Healthcare or give up 8.48% of portfolio value over 90 days.

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

LiCycle Holdings Corp  vs.  The Gabelli Healthcare

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 inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

The Gabelli Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Healthcare 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 Gabelli Healthcare

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

The idea behind LiCycle Holdings Corp and The Gabelli Healthcare 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.