Correlation Between Core Molding and Loop Industries

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

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

Diversification Opportunities for Core Molding and Loop Industries

0.07

Correlation Coefficient

Core Molding  Loop Industries

Significant diversification

The 3 months correlation between Core and Loop is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Core Molding Technologies and Loop Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Industries and Core Molding 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 Core Molding Technologies 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 Core Molding i.e., Core Molding and Loop Industries go up and down completely randomly.

Pair Corralation between Core Molding and Loop Industries

Considering the 90-day investment horizon Core Molding is expected to generate 2.55 times less return on investment than Loop Industries. But when comparing it to its historical volatility, Core Molding Technologies is 3.28 times less risky than Loop Industries. It trades about 0.14 of its potential returns per unit of risk. Loop Industries is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  123.00  in Loop Industries on March 13, 2025 and sell it today you would earn a total of  47.00  from holding Loop Industries or generate 38.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Core Molding Technologies  vs.  Loop Industries

Core Molding Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Core Molding Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Core Molding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Loop Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loop Industries are ranked lower than 8 (%) 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 Core Molding and Loop Industries

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

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.