Correlation Between Loop Energy and ABB
Can any of the company-specific risk be diversified away by investing in both Loop Energy and ABB 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 Energy and ABB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loop Energy and ABB, you can compare the effects of market volatilities on Loop Energy and ABB 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 Energy with a short position of ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loop Energy and ABB.
Diversification Opportunities for Loop Energy and ABB
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Loop and ABB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Loop Energy and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB and Loop Energy 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 Energy are associated (or correlated) with ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of Loop Energy i.e., Loop Energy and ABB go up and down completely randomly.
Pair Corralation between Loop Energy and ABB
Assuming the 90 days horizon Loop Energy is expected to generate 2.7 times less return on investment than ABB. But when comparing it to its historical volatility, Loop Energy is 1.26 times less risky than ABB. It trades about 0.01 of its potential returns per unit of risk. ABB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,400 in ABB on August 28, 2024 and sell it today you would earn a total of 179.00 from holding ABB or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Loop Energy vs. ABB
Performance |
| Timeline |
| Loop Energy |
| ABB |
Loop Energy and ABB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loop Energy and ABB
The main advantage of trading using opposite Loop Energy and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loop Energy position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.| Loop Energy vs. FREYR Battery SA | Loop Energy vs. nVent Electric PLC | Loop Energy vs. Hubbell | Loop Energy vs. Advanced Energy Industries |
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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