Correlation Between Brookfield Corp and Loandepot
Can any of the company-specific risk be diversified away by investing in both Brookfield Corp and Loandepot 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 Brookfield Corp and Loandepot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Corp and Loandepot, you can compare the effects of market volatilities on Brookfield Corp and Loandepot 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 Brookfield Corp with a short position of Loandepot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Corp and Loandepot.
Diversification Opportunities for Brookfield Corp and Loandepot
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and Loandepot is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and Brookfield Corp 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 Brookfield Corp are associated (or correlated) with Loandepot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loandepot has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and Loandepot go up and down completely randomly.
Pair Corralation between Brookfield Corp and Loandepot
Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 1.78 times less return on investment than Loandepot. But when comparing it to its historical volatility, Brookfield Corp is 3.24 times less risky than Loandepot. It trades about 0.21 of its potential returns per unit of risk. Loandepot is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 211.00 in Loandepot on August 25, 2024 and sell it today you would earn a total of 23.00 from holding Loandepot or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Corp vs. Loandepot
Performance |
| Timeline |
| Brookfield Corp |
| Loandepot |
Brookfield Corp and Loandepot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Corp and Loandepot
The main advantage of trading using opposite Brookfield Corp and Loandepot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Corp position performs unexpectedly, Loandepot 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 will offset losses from the drop in Loandepot's long position.| Brookfield Corp vs. KKR Co LP | Brookfield Corp vs. Blackstone Group | Brookfield Corp vs. T Rowe Price | Brookfield Corp vs. Apollo Global Management |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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