Correlation Between Loop Industries and Givaudan
Can any of the company-specific risk be diversified away by investing in both Loop Industries and Givaudan 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 Loop Industries and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loop Industries and Givaudan SA, you can compare the effects of market volatilities on Loop Industries and Givaudan 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 Loop Industries with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loop Industries and Givaudan.
Diversification Opportunities for Loop Industries and Givaudan
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Loop and Givaudan is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Loop Industries and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Loop Industries 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 Loop Industries are associated (or correlated) with Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Loop Industries i.e., Loop Industries and Givaudan go up and down completely randomly.
Pair Corralation between Loop Industries and Givaudan
Given the investment horizon of 90 days Loop Industries is expected to generate 1.95 times more return on investment than Givaudan. However, Loop Industries is 1.95 times more volatile than Givaudan SA. It trades about -0.02 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.22 per unit of risk. If you would invest 148.00 in Loop Industries on August 28, 2024 and sell it today you would lose (4.00) from holding Loop Industries or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loop Industries vs. Givaudan SA
Performance |
| Timeline |
| Loop Industries |
| Givaudan SA |
Loop Industries and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loop Industries and Givaudan
The main advantage of trading using opposite Loop Industries and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loop Industries position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Loop Industries vs. H B Fuller | Loop Industries vs. Element Solutions | Loop Industries vs. Innospec | Loop Industries vs. Cabot |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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