Correlation Between Calumet Specialty and Loop Industries
Can any of the company-specific risk be diversified away by investing in both Calumet Specialty and Loop Industries 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 Calumet Specialty and Loop Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calumet Specialty Products and Loop Industries, you can compare the effects of market volatilities on Calumet Specialty and Loop Industries 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 Calumet Specialty with a short position of Loop Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calumet Specialty and Loop Industries.
Diversification Opportunities for Calumet Specialty and Loop Industries
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Calumet and Loop is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Calumet Specialty Products and Loop Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Industries and Calumet Specialty 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 Calumet Specialty Products are associated (or correlated) with Loop Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Industries has no effect on the direction of Calumet Specialty i.e., Calumet Specialty and Loop Industries go up and down completely randomly.
Pair Corralation between Calumet Specialty and Loop Industries
Given the investment horizon of 90 days Calumet Specialty is expected to generate 2.1 times less return on investment than Loop Industries. But when comparing it to its historical volatility, Calumet Specialty Products is 1.14 times less risky than Loop Industries. It trades about 0.05 of its potential returns per unit of risk. Loop Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 131.00 in Loop Industries on August 26, 2024 and sell it today you would earn a total of 10.00 from holding Loop Industries or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Calumet Specialty Products vs. Loop Industries
Performance |
| Timeline |
| Calumet Specialty |
| Loop Industries |
Calumet Specialty and Loop Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calumet Specialty and Loop Industries
The main advantage of trading using opposite Calumet Specialty and Loop Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calumet Specialty position performs unexpectedly, Loop Industries 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 Loop Industries will offset losses from the drop in Loop Industries' long position.| Calumet Specialty vs. Battalion Oil Corp | Calumet Specialty vs. Granite Ridge Resources | Calumet Specialty vs. GeoPark | Calumet Specialty vs. Crescent Energy Co |
| Loop Industries vs. H B Fuller | Loop Industries vs. Element Solutions | Loop Industries vs. Innospec | Loop Industries vs. Cabot |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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