Correlation Between Calumet Specialty and Loop Industries

Can any of the company-specific risk be diversified away by investing in both Calumet Specialty 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 Calumet Specialty and Loop Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calumet Specialty Products and Loop Industries, you can compare the effects of market volatilities on Calumet Specialty 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 Calumet Specialty with a short position of Loop Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calumet Specialty and Loop Industries.

Diversification Opportunities for Calumet Specialty and Loop Industries

0.35

Correlation Coefficient

Calumet Specialty  Loop Industries

Weak diversification

The 3 months correlation between Calumet and Loop is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Calumet Specialty Products and Loop Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Industries and Calumet Specialty 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 Calumet Specialty Products 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 Calumet Specialty i.e., Calumet Specialty and Loop Industries go up and down completely randomly.

Pair Corralation between Calumet Specialty and Loop Industries

Given the investment horizon of 90 days Calumet Specialty Products is expected to under-perform the Loop Industries. But the stock apears to be less risky and, when comparing its historical volatility, Calumet Specialty Products is 1.96 times less risky than Loop Industries. The stock trades about -0.2 of its potential returns per unit of risk. The Loop Industries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  130.00  in Loop Industries on December 4, 2024 and sell it today you would lose (11.00) from holding Loop Industries or give up 8.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Calumet Specialty Products  vs.  Loop Industries

Calumet Specialty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calumet Specialty Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Loop Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Loop Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Loop Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calumet Specialty and Loop Industries

The main advantage of trading using opposite Calumet Specialty and Loop Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calumet Specialty 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 Calumet Specialty Products 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.