Correlation Between LOANDEPOT INC and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both LOANDEPOT INC and CHINA HUARONG 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 CHINA HUARONG 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 CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on LOANDEPOT INC and CHINA HUARONG 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 CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOANDEPOT INC and CHINA HUARONG.
Diversification Opportunities for LOANDEPOT INC and CHINA HUARONG
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LOANDEPOT and CHINA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD 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 CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of LOANDEPOT INC i.e., LOANDEPOT INC and CHINA HUARONG go up and down completely randomly.
Pair Corralation between LOANDEPOT INC and CHINA HUARONG
Assuming the 90 days horizon LOANDEPOT INC A is expected to generate 0.22 times more return on investment than CHINA HUARONG. However, LOANDEPOT INC A is 4.56 times less risky than CHINA HUARONG. It trades about -0.11 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about -0.03 per unit of risk. If you would invest 214.00 in LOANDEPOT INC A on September 18, 2024 and sell it today you would lose (17.00) from holding LOANDEPOT INC A or give up 7.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LOANDEPOT INC A vs. CHINA HUARONG ENERHD 50
Performance |
Timeline |
LOANDEPOT INC A |
CHINA HUARONG ENERHD |
LOANDEPOT INC and CHINA HUARONG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LOANDEPOT INC and CHINA HUARONG
The main advantage of trading using opposite LOANDEPOT INC and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOANDEPOT INC position performs unexpectedly, CHINA HUARONG 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 CHINA HUARONG will offset losses from the drop in CHINA HUARONG's long position.LOANDEPOT INC vs. MGIC INVESTMENT | LOANDEPOT INC vs. REGAL ASIAN INVESTMENTS | LOANDEPOT INC vs. ALERION CLEANPOWER | LOANDEPOT INC vs. Virtus Investment Partners |
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Check out your portfolio center.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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