Correlation Between LOANDEPOT INC and AOYAMA TRADING

Can any of the company-specific risk be diversified away by investing in both LOANDEPOT INC and AOYAMA TRADING 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 AOYAMA TRADING 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 AOYAMA TRADING, you can compare the effects of market volatilities on LOANDEPOT INC and AOYAMA TRADING 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 AOYAMA TRADING. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOANDEPOT INC and AOYAMA TRADING.

Diversification Opportunities for LOANDEPOT INC and AOYAMA TRADING

0.75

Correlation Coefficient

LOANDEPOT INC  AOYAMA TRADING

Poor diversification

The 3 months correlation between LOANDEPOT and AOYAMA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING 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 AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of LOANDEPOT INC i.e., LOANDEPOT INC and AOYAMA TRADING go up and down completely randomly.

Pair Corralation between LOANDEPOT INC and AOYAMA TRADING

Assuming the 90 days horizon LOANDEPOT INC A is expected to under-perform the AOYAMA TRADING. In addition to that, LOANDEPOT INC is 4.01 times more volatile than AOYAMA TRADING. It trades about -0.09 of its total potential returns per unit of risk. AOYAMA TRADING is currently generating about -0.09 per unit of volatility. If you would invest  1,390  in AOYAMA TRADING on December 22, 2024 and sell it today you would lose (90.00) from holding AOYAMA TRADING or give up 6.47% of portfolio value over 90 days.

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

LOANDEPOT INC A  vs.  AOYAMA TRADING

LOANDEPOT INC A

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AOYAMA TRADING

Risk-Adjusted Performance

Very Weak

Over the last 90 days AOYAMA TRADING 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 LOANDEPOT INC and AOYAMA TRADING

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

The idea behind LOANDEPOT INC A and AOYAMA TRADING 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.