Correlation Between LOANDEPOT INC and Virtus Investment

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

Diversification Opportunities for LOANDEPOT INC and Virtus Investment

0.33

Correlation Coefficient

LOANDEPOT INC  Virtus Investment

Weak diversification

The 3 months correlation between LOANDEPOT and Virtus is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of LOANDEPOT INC i.e., LOANDEPOT INC and Virtus Investment go up and down completely randomly.

Pair Corralation between LOANDEPOT INC and Virtus Investment

Assuming the 90 days horizon LOANDEPOT INC A is expected to under-perform the Virtus Investment. In addition to that, LOANDEPOT INC is 2.16 times more volatile than Virtus Investment Partners. It trades about -0.19 of its total potential returns per unit of risk. Virtus Investment Partners is currently generating about -0.26 per unit of volatility. If you would invest  23,200  in Virtus Investment Partners on October 10, 2024 and sell it today you would lose (2,000) from holding Virtus Investment Partners or give up 8.62% of portfolio value over 90 days.

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

LOANDEPOT INC A  vs.  Virtus Investment Partners

LOANDEPOT INC A

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LOANDEPOT INC A are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LOANDEPOT INC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Virtus Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LOANDEPOT INC and Virtus Investment

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

The idea behind LOANDEPOT INC A and Virtus Investment Partners 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..