Correlation Between WD 40 and Loop Industries
Can any of the company-specific risk be diversified away by investing in both WD 40 and Loop Industries 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 WD 40 and Loop Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WD 40 Company and Loop Industries, you can compare the effects of market volatilities on WD 40 and Loop Industries 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 WD 40 with a short position of Loop Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of WD 40 and Loop Industries.
Diversification Opportunities for WD 40 and Loop Industries
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WDFC and Loop is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 Company and Loop Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Industries and WD 40 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 WD 40 Company are associated (or correlated) with Loop Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Industries has no effect on the direction of WD 40 i.e., WD 40 and Loop Industries go up and down completely randomly.
Pair Corralation between WD 40 and Loop Industries
Given the investment horizon of 90 days WD 40 Company is expected to generate 0.37 times more return on investment than Loop Industries. However, WD 40 Company is 2.67 times less risky than Loop Industries. It trades about 0.07 of its potential returns per unit of risk. Loop Industries is currently generating about 0.0 per unit of risk. If you would invest 16,172 in WD 40 Company on August 28, 2024 and sell it today you would earn a total of 12,477 from holding WD 40 Company or generate 77.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WD 40 Company vs. Loop Industries
Performance |
| Timeline |
| WD 40 Company |
| Loop Industries |
WD 40 and Loop Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WD 40 and Loop Industries
The main advantage of trading using opposite WD 40 and Loop Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WD 40 position performs unexpectedly, Loop Industries 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 Industries will offset losses from the drop in Loop Industries' long position.The idea behind WD 40 Company and Loop Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Stocks Directory Find actively traded stocks across global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |