Correlation Between Loop Industries and Cabana Target
Can any of the company-specific risk be diversified away by investing in both Loop Industries and Cabana Target 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 Cabana Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loop Industries and Cabana Target Drawdown, you can compare the effects of market volatilities on Loop Industries and Cabana Target 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 Cabana Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loop Industries and Cabana Target.
Diversification Opportunities for Loop Industries and Cabana Target
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Loop and Cabana is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Loop Industries and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown 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 Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of Loop Industries i.e., Loop Industries and Cabana Target go up and down completely randomly.
Pair Corralation between Loop Industries and Cabana Target
Given the investment horizon of 90 days Loop Industries is expected to generate 12.06 times more return on investment than Cabana Target. However, Loop Industries is 12.06 times more volatile than Cabana Target Drawdown. It trades about 0.12 of its potential returns per unit of risk. Cabana Target Drawdown is currently generating about 0.34 per unit of risk. If you would invest 142.00 in Loop Industries on August 30, 2024 and sell it today you would earn a total of 13.00 from holding Loop Industries or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loop Industries vs. Cabana Target Drawdown
Performance |
| Timeline |
| Loop Industries |
| Cabana Target Drawdown |
Loop Industries and Cabana Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loop Industries and Cabana Target
The main advantage of trading using opposite Loop Industries and Cabana Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loop Industries position performs unexpectedly, Cabana Target 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 Cabana Target will offset losses from the drop in Cabana Target's long position.| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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