Correlation Between LOANDEPOT INC and ELLINGTON FINL

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Can any of the company-specific risk be diversified away by investing in both LOANDEPOT INC and ELLINGTON FINL 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 LOANDEPOT INC and ELLINGTON FINL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOANDEPOT INC A and ELLINGTON FINL INC, you can compare the effects of market volatilities on LOANDEPOT INC and ELLINGTON FINL 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 LOANDEPOT INC with a short position of ELLINGTON FINL. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOANDEPOT INC and ELLINGTON FINL.

Diversification Opportunities for LOANDEPOT INC and ELLINGTON FINL

LOANDEPOTELLINGTONDiversified AwayLOANDEPOTELLINGTONDiversified Away100%
-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between LOANDEPOT and ELLINGTON is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and ELLINGTON FINL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELLINGTON FINL INC and LOANDEPOT INC 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 LOANDEPOT INC A are associated (or correlated) with ELLINGTON FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELLINGTON FINL INC has no effect on the direction of LOANDEPOT INC i.e., LOANDEPOT INC and ELLINGTON FINL go up and down completely randomly.

Pair Corralation between LOANDEPOT INC and ELLINGTON FINL

Assuming the 90 days horizon LOANDEPOT INC A is expected to under-perform the ELLINGTON FINL. In addition to that, LOANDEPOT INC is 5.03 times more volatile than ELLINGTON FINL INC. It trades about -0.02 of its total potential returns per unit of risk. ELLINGTON FINL INC is currently generating about 0.13 per unit of volatility. If you would invest  1,092  in ELLINGTON FINL INC on October 14, 2024 and sell it today you would earn a total of  88.00  from holding ELLINGTON FINL INC or generate 8.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

LOANDEPOT INC A  vs.  ELLINGTON FINL INC

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -25-20-15-10-50510
JavaScript chart by amCharts 3.21.15LDD 1EL
       Timeline  
LOANDEPOT INC A 

Risk-Adjusted Performance

0 of 100

 
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Over the last 90 days LOANDEPOT INC A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1.61.822.22.42.6
ELLINGTON FINL INC 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ELLINGTON FINL INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ELLINGTON FINL may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan10.610.81111.211.411.611.812

LOANDEPOT INC and ELLINGTON FINL Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.6-6.44-4.28-2.12-0.03261.923.885.837.79 0.10.20.30.4
JavaScript chart by amCharts 3.21.15LDD 1EL
       Returns  

Pair Trading with LOANDEPOT INC and ELLINGTON FINL

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

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