Correlation Between LiCycle Holdings and Walmart

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

Diversification Opportunities for LiCycle Holdings and Walmart

0.01

Correlation Coefficient

LiCycle Holdings  Walmart

Significant diversification

The 3 months correlation between LiCycle and Walmart is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding LiCycle Holdings Corp and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of LiCycle Holdings i.e., LiCycle Holdings and Walmart go up and down completely randomly.

Pair Corralation between LiCycle Holdings and Walmart

Given the investment horizon of 90 days LiCycle Holdings Corp is expected to generate 13.19 times more return on investment than Walmart. However, LiCycle Holdings is 13.19 times more volatile than Walmart. It trades about 0.24 of its potential returns per unit of risk. Walmart is currently generating about 0.23 per unit of risk. If you would invest  225.00  in LiCycle Holdings Corp on August 10, 2024 and sell it today you would earn a total of  136.00  from holding LiCycle Holdings Corp or generate 60.44% return on investment over 90 days.

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

LiCycle Holdings Corp  vs.  Walmart

LiCycle Holdings Corp

Risk-Adjusted Performance

7 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LiCycle Holdings Corp are ranked lower than 7 (%) 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.

Walmart

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LiCycle Holdings and Walmart

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

The idea behind LiCycle Holdings Corp and Walmart 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.