Correlation Between FIRST NATIONAL and LOANDEPOT INC
Can any of the company-specific risk be diversified away by investing in both FIRST NATIONAL and LOANDEPOT INC 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 FIRST NATIONAL and LOANDEPOT INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST NATIONAL FIN and LOANDEPOT INC A, you can compare the effects of market volatilities on FIRST NATIONAL and LOANDEPOT INC 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 FIRST NATIONAL with a short position of LOANDEPOT INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST NATIONAL and LOANDEPOT INC.
Diversification Opportunities for FIRST NATIONAL and LOANDEPOT INC
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FIRST and LOANDEPOT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding FIRST NATIONAL FIN and LOANDEPOT INC A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOANDEPOT INC A and FIRST NATIONAL 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 FIRST NATIONAL FIN are associated (or correlated) with LOANDEPOT INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOANDEPOT INC A has no effect on the direction of FIRST NATIONAL i.e., FIRST NATIONAL and LOANDEPOT INC go up and down completely randomly.
Pair Corralation between FIRST NATIONAL and LOANDEPOT INC
Assuming the 90 days horizon FIRST NATIONAL FIN is expected to generate 0.36 times more return on investment than LOANDEPOT INC. However, FIRST NATIONAL FIN is 2.81 times less risky than LOANDEPOT INC. It trades about 0.08 of its potential returns per unit of risk. LOANDEPOT INC A is currently generating about -0.04 per unit of risk. If you would invest 2,323 in FIRST NATIONAL FIN on November 2, 2024 and sell it today you would earn a total of 337.00 from holding FIRST NATIONAL FIN or generate 14.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST NATIONAL FIN vs. LOANDEPOT INC A
Performance |
| Timeline |
| FIRST NATIONAL FIN |
| LOANDEPOT INC A |
FIRST NATIONAL and LOANDEPOT INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST NATIONAL and LOANDEPOT INC
The main advantage of trading using opposite FIRST NATIONAL and LOANDEPOT INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST NATIONAL position performs unexpectedly, LOANDEPOT INC 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 LOANDEPOT INC will offset losses from the drop in LOANDEPOT INC's long position.| FIRST NATIONAL vs. CITIC Telecom International | FIRST NATIONAL vs. SIDETRADE EO 1 | FIRST NATIONAL vs. Ribbon Communications | FIRST NATIONAL vs. ecotel communication ag |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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