Correlation Between LOANDEPOT INC and PREMIER FOODS

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

Diversification Opportunities for LOANDEPOT INC and PREMIER FOODS

LOANDEPOTPREMIERDiversified AwayLOANDEPOTPREMIERDiversified Away100%
0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between LOANDEPOT and PREMIER is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of LOANDEPOT INC i.e., LOANDEPOT INC and PREMIER FOODS go up and down completely randomly.

Pair Corralation between LOANDEPOT INC and PREMIER FOODS

Assuming the 90 days horizon LOANDEPOT INC A is expected to under-perform the PREMIER FOODS. In addition to that, LOANDEPOT INC is 2.6 times more volatile than PREMIER FOODS. It trades about -0.11 of its total potential returns per unit of risk. PREMIER FOODS is currently generating about 0.05 per unit of volatility. If you would invest  220.00  in PREMIER FOODS on November 19, 2024 and sell it today you would earn a total of  8.00  from holding PREMIER FOODS or generate 3.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

LOANDEPOT INC A  vs.  PREMIER FOODS

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-100
JavaScript chart by amCharts 3.21.15LDD FOJ1
       Timeline  
LOANDEPOT INC A 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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 March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.51.61.71.81.922.12.2
PREMIER FOODS 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in PREMIER FOODS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PREMIER FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.12.152.22.252.32.35

LOANDEPOT INC and PREMIER FOODS Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.33-4.74-3.15-1.560.01.342.74.065.42 0.050.100.15
JavaScript chart by amCharts 3.21.15LDD FOJ1
       Returns  

Pair Trading with LOANDEPOT INC and PREMIER FOODS

The main advantage of trading using opposite LOANDEPOT INC and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOANDEPOT INC position performs unexpectedly, PREMIER FOODS 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.
The idea behind LOANDEPOT INC A and PREMIER FOODS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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