Correlation Between Loandepot and SFL

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

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

Diversification Opportunities for Loandepot and SFL

-0.27

Correlation Coefficient

Loandepot  SFL

Very good diversification

The 3 months correlation between Loandepot and SFL is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Loandepot and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation 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 SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Loandepot i.e., Loandepot and SFL go up and down completely randomly.

Pair Corralation between Loandepot and SFL

Considering the 90-day investment horizon Loandepot is expected to under-perform the SFL. In addition to that, Loandepot is 2.85 times more volatile than SFL Corporation. It trades about -0.05 of its total potential returns per unit of risk. SFL Corporation is currently generating about 0.0 per unit of volatility. If you would invest  1,092  in SFL Corporation on October 20, 2024 and sell it today you would lose (8.00) from holding SFL Corporation or give up 0.73% of portfolio value over 90 days.

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

Loandepot  vs.  SFL Corp.

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.

SFL Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, SFL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Loandepot and SFL

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

The idea behind Loandepot and SFL Corporation 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.