Correlation Between IPath Series and Loop Industries

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

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

Diversification Opportunities for IPath Series and Loop Industries

0.27

Correlation Coefficient

IPath Series  Loop Industries

Modest diversification

The 3 months correlation between IPath and Loop is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B and Loop Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Industries and IPath Series 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 iPath Series B 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 IPath Series i.e., IPath Series and Loop Industries go up and down completely randomly.

Pair Corralation between IPath Series and Loop Industries

Considering the 90-day investment horizon iPath Series B is expected to generate 0.76 times more return on investment than Loop Industries. However, iPath Series B is 1.32 times less risky than Loop Industries. It trades about 0.18 of its potential returns per unit of risk. Loop Industries is currently generating about -0.01 per unit of risk. If you would invest  2,207  in iPath Series B on January 17, 2024 and sell it today you would earn a total of  522.00  from holding iPath Series B or generate 23.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.56%
Values	Daily Returns

iPath Series B  vs.  Loop Industries

iPath Series B

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iPath Series B are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, IPath Series displayed solid returns over the last few months and may actually be approaching a breakup point.

Loop Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loop Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with IPath Series and Loop Industries

The main advantage of trading using opposite IPath Series and Loop Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series 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 iPath Series B 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.