Correlation Between Danimer Scientific and Loop Industries
Can any of the company-specific risk be diversified away by investing in both Danimer Scientific 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 Danimer Scientific and Loop Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danimer Scientific and Loop Industries, you can compare the effects of market volatilities on Danimer Scientific 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 Danimer Scientific with a short position of Loop Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danimer Scientific and Loop Industries.
Diversification Opportunities for Danimer Scientific and Loop Industries
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Danimer and Loop is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Danimer Scientific and Loop Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Industries and Danimer Scientific 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 Danimer Scientific 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 Danimer Scientific i.e., Danimer Scientific and Loop Industries go up and down completely randomly.
Pair Corralation between Danimer Scientific and Loop Industries
Given the investment horizon of 90 days Danimer Scientific is expected to under-perform the Loop Industries. In addition to that, Danimer Scientific is 1.32 times more volatile than Loop Industries. It trades about -0.06 of its total potential returns per unit of risk. Loop Industries is currently generating about 0.0 per unit of volatility. If you would invest 248.00 in Loop Industries on August 27, 2024 and sell it today you would lose (107.00) from holding Loop Industries or give up 43.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danimer Scientific vs. Loop Industries
Performance |
| Timeline |
| Danimer Scientific |
| Loop Industries |
Danimer Scientific and Loop Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danimer Scientific and Loop Industries
The main advantage of trading using opposite Danimer Scientific and Loop Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danimer Scientific 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.| Danimer Scientific vs. LyondellBasell Industries NV | Danimer Scientific vs. International Flavors Fragrances | Danimer Scientific vs. Cabot | Danimer Scientific vs. Westlake Chemical |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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