Correlation Between Powell Industries and Loop Energy
Can any of the company-specific risk be diversified away by investing in both Powell Industries and Loop Energy 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 Powell Industries and Loop Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powell Industries and Loop Energy, you can compare the effects of market volatilities on Powell Industries and Loop Energy 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 Powell Industries with a short position of Loop Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powell Industries and Loop Energy.
Diversification Opportunities for Powell Industries and Loop Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Powell and Loop is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Powell Industries and Loop Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Energy and Powell 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 Powell Industries are associated (or correlated) with Loop Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Energy has no effect on the direction of Powell Industries i.e., Powell Industries and Loop Energy go up and down completely randomly.
Pair Corralation between Powell Industries and Loop Energy
Given the investment horizon of 90 days Powell Industries is expected to generate 5.23 times less return on investment than Loop Energy. But when comparing it to its historical volatility, Powell Industries is 10.01 times less risky than Loop Energy. It trades about 0.12 of its potential returns per unit of risk. Loop Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Loop Energy on August 25, 2024 and sell it today you would lose (1.00) from holding Loop Energy or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powell Industries vs. Loop Energy
Performance |
| Timeline |
| Powell Industries |
| Loop Energy |
Powell Industries and Loop Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powell Industries and Loop Energy
The main advantage of trading using opposite Powell Industries and Loop Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powell Industries position performs unexpectedly, Loop Energy 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 Energy will offset losses from the drop in Loop Energy's long position.| Powell Industries vs. Kimball Electronics | Powell Industries vs. Hayward Holdings | Powell Industries vs. nVent Electric PLC | Powell Industries vs. Energizer Holdings |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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