Correlation Between VITEC SOFTWARE and LOANDEPOT INC

Can any of the company-specific risk be diversified away by investing in both VITEC SOFTWARE and LOANDEPOT INC 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 VITEC SOFTWARE and LOANDEPOT INC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VITEC SOFTWARE GROUP and LOANDEPOT INC A, you can compare the effects of market volatilities on VITEC SOFTWARE and LOANDEPOT INC 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 VITEC SOFTWARE with a short position of LOANDEPOT INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of VITEC SOFTWARE and LOANDEPOT INC.

Diversification Opportunities for VITEC SOFTWARE and LOANDEPOT INC

-0.37

Correlation Coefficient

VITEC SOFTWARE  LOANDEPOT INC

Very good diversification

The 3 months correlation between VITEC and LOANDEPOT is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding VITEC SOFTWARE GROUP and LOANDEPOT INC A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOANDEPOT INC A and VITEC SOFTWARE 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 VITEC SOFTWARE GROUP are associated (or correlated) with LOANDEPOT INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOANDEPOT INC A has no effect on the direction of VITEC SOFTWARE i.e., VITEC SOFTWARE and LOANDEPOT INC go up and down completely randomly.

Pair Corralation between VITEC SOFTWARE and LOANDEPOT INC

Assuming the 90 days horizon VITEC SOFTWARE GROUP is expected to generate 0.46 times more return on investment than LOANDEPOT INC. However, VITEC SOFTWARE GROUP is 2.17 times less risky than LOANDEPOT INC. It trades about 0.03 of its potential returns per unit of risk. LOANDEPOT INC A is currently generating about 0.01 per unit of risk. If you would invest  3,907  in VITEC SOFTWARE GROUP on October 26, 2024 and sell it today you would earn a total of  975.00  from holding VITEC SOFTWARE GROUP or generate 24.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

VITEC SOFTWARE GROUP  vs.  LOANDEPOT INC A

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, VITEC SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

LOANDEPOT INC A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOANDEPOT INC A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with VITEC SOFTWARE and LOANDEPOT INC

The main advantage of trading using opposite VITEC SOFTWARE and LOANDEPOT INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VITEC SOFTWARE position performs unexpectedly, LOANDEPOT INC 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 LOANDEPOT INC will offset losses from the drop in LOANDEPOT INC's long position.

The idea behind VITEC SOFTWARE GROUP and LOANDEPOT INC A 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.