Correlation Between Loop Industries and Ingevity Corp
Can any of the company-specific risk be diversified away by investing in both Loop Industries and Ingevity Corp 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 Ingevity Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loop Industries and Ingevity Corp, you can compare the effects of market volatilities on Loop Industries and Ingevity Corp 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 Ingevity Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loop Industries and Ingevity Corp.
Diversification Opportunities for Loop Industries and Ingevity Corp
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Loop and Ingevity is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Loop Industries and Ingevity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingevity Corp 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 Ingevity Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingevity Corp has no effect on the direction of Loop Industries i.e., Loop Industries and Ingevity Corp go up and down completely randomly.
Pair Corralation between Loop Industries and Ingevity Corp
Given the investment horizon of 90 days Loop Industries is expected to generate 3.36 times less return on investment than Ingevity Corp. In addition to that, Loop Industries is 1.25 times more volatile than Ingevity Corp. It trades about 0.02 of its total potential returns per unit of risk. Ingevity Corp is currently generating about 0.1 per unit of volatility. If you would invest 3,811 in Ingevity Corp on August 31, 2024 and sell it today you would earn a total of 962.00 from holding Ingevity Corp or generate 25.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loop Industries vs. Ingevity Corp
Performance |
| Timeline |
| Loop Industries |
| Ingevity Corp |
Loop Industries and Ingevity Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loop Industries and Ingevity Corp
The main advantage of trading using opposite Loop Industries and Ingevity Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loop Industries position performs unexpectedly, Ingevity Corp 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 Ingevity Corp will offset losses from the drop in Ingevity Corp's long position.| Loop Industries vs. H B Fuller | Loop Industries vs. Element Solutions | Loop Industries vs. Innospec | Loop Industries vs. Cabot |
| Ingevity Corp vs. H B Fuller | Ingevity Corp vs. Minerals Technologies | Ingevity Corp vs. Quaker Chemical | Ingevity Corp vs. Oil Dri |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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