Correlation Between LOANDEPOT INC and SPARTAN STORES

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

Diversification Opportunities for LOANDEPOT INC and SPARTAN STORES

-0.23

Correlation Coefficient

LOANDEPOT INC  SPARTAN STORES

Very good diversification

The 3 months correlation between LOANDEPOT and SPARTAN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES 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 SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of LOANDEPOT INC i.e., LOANDEPOT INC and SPARTAN STORES go up and down completely randomly.

Pair Corralation between LOANDEPOT INC and SPARTAN STORES

Assuming the 90 days horizon LOANDEPOT INC A is expected to under-perform the SPARTAN STORES. In addition to that, LOANDEPOT INC is 2.52 times more volatile than SPARTAN STORES. It trades about -0.17 of its total potential returns per unit of risk. SPARTAN STORES is currently generating about 0.2 per unit of volatility. If you would invest  1,739  in SPARTAN STORES on September 23, 2024 and sell it today you would earn a total of  111.00  from holding SPARTAN STORES or generate 6.38% return on investment over 90 days.

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

LOANDEPOT INC A  vs.  SPARTAN STORES

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

SPARTAN STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPARTAN STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, SPARTAN STORES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LOANDEPOT INC and SPARTAN STORES

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

The idea behind LOANDEPOT INC A and SPARTAN STORES 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.