Correlation Between Loandepot and Axos Financial

Can any of the company-specific risk be diversified away by investing in both Loandepot and Axos Financial 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 and Axos Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Loandepot and Axos Financial, you can compare the effects of market volatilities on Loandepot and Axos Financial 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 with a short position of Axos Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loandepot and Axos Financial.

Diversification Opportunities for Loandepot and Axos Financial

-0.02

Correlation Coefficient

Loandepot  Axos Financial

Good diversification

The 3 months correlation between Loandepot and Axos is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Loandepot and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and Loandepot 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 are associated (or correlated) with Axos Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axos Financial has no effect on the direction of Loandepot i.e., Loandepot and Axos Financial go up and down completely randomly.

Pair Corralation between Loandepot and Axos Financial

Considering the 90-day investment horizon Loandepot is expected to under-perform the Axos Financial. In addition to that, Loandepot is 1.4 times more volatile than Axos Financial. It trades about -0.06 of its total potential returns per unit of risk. Axos Financial is currently generating about 0.13 per unit of volatility. If you would invest  6,320  in Axos Financial on September 13, 2024 and sell it today you would earn a total of  1,681  from holding Axos Financial or generate 26.6% return on investment over 90 days.

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

Loandepot  vs.  Axos Financial

Loandepot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loandepot 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 fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Axos Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Axos Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loandepot and Axos Financial

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

The idea behind Loandepot and Axos Financial 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..