Correlation Between Loandepot and Guild Holdings

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

By analyzing existing cross correlation between Loandepot and Guild Holdings Co, you can compare the effects of market volatilities on Loandepot and Guild Holdings 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 Guild Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loandepot and Guild Holdings.

Diversification Opportunities for Loandepot and Guild Holdings

0.48

Correlation Coefficient

Loandepot  Guild Holdings

Very weak diversification

The 3 months correlation between Loandepot and Guild is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Loandepot and Guild Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Holdings 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 Guild Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Holdings has no effect on the direction of Loandepot i.e., Loandepot and Guild Holdings go up and down completely randomly.

Pair Corralation between Loandepot and Guild Holdings

Considering the 90-day investment horizon Loandepot is expected to generate 2.87 times more return on investment than Guild Holdings. However, Loandepot is 2.87 times more volatile than Guild Holdings Co. It trades about -0.02 of its potential returns per unit of risk. Guild Holdings Co is currently generating about -0.15 per unit of risk. If you would invest  265.00  in Loandepot on September 3, 2024 and sell it today you would lose (40.00) from holding Loandepot or give up 15.09% of portfolio value over 90 days.

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

Loandepot  vs.  Guild Holdings Co

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 latest uncertain performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Guild Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guild Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Loandepot and Guild Holdings

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

The idea behind Loandepot and Guild Holdings Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.