Correlation Between LOANDEPOT INC and Macerich

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

Diversification Opportunities for LOANDEPOT INC and Macerich

0.08

Correlation Coefficient

LOANDEPOT INC  Macerich

Significant diversification

The 3 months correlation between LOANDEPOT and Macerich is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and The Macerich in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macerich 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 Macerich. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macerich has no effect on the direction of LOANDEPOT INC i.e., LOANDEPOT INC and Macerich go up and down completely randomly.

Pair Corralation between LOANDEPOT INC and Macerich

Assuming the 90 days horizon LOANDEPOT INC A is expected to under-perform the Macerich. In addition to that, LOANDEPOT INC is 3.08 times more volatile than The Macerich. It trades about -0.03 of its total potential returns per unit of risk. The Macerich is currently generating about -0.08 per unit of volatility. If you would invest  1,936  in The Macerich on October 25, 2024 and sell it today you would lose (48.00) from holding The Macerich or give up 2.48% of portfolio value over 90 days.

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

LOANDEPOT INC A  vs.  The Macerich

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 nearly stable basic indicators, LOANDEPOT INC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Macerich

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Macerich are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Macerich reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LOANDEPOT INC and Macerich

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

The idea behind LOANDEPOT INC A and The Macerich 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.