Correlation Between CNFinance Holdings and Loandepot
Can any of the company-specific risk be diversified away by investing in both CNFinance Holdings 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 CNFinance Holdings and Loandepot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNFinance Holdings and Loandepot, you can compare the effects of market volatilities on CNFinance Holdings 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 CNFinance Holdings with a short position of Loandepot. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNFinance Holdings and Loandepot.
Diversification Opportunities for CNFinance Holdings and Loandepot
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CNFinance and Loandepot is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CNFinance Holdings and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and CNFinance Holdings 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 CNFinance Holdings 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 CNFinance Holdings i.e., CNFinance Holdings and Loandepot go up and down completely randomly.
Pair Corralation between CNFinance Holdings and Loandepot
Considering the 90-day investment horizon CNFinance Holdings is expected to under-perform the Loandepot. In addition to that, CNFinance Holdings is 1.54 times more volatile than Loandepot. It trades about -0.01 of its total potential returns per unit of risk. Loandepot is currently generating about 0.06 per unit of volatility. If you would invest 181.00 in Loandepot on August 25, 2024 and sell it today you would earn a total of 53.00 from holding Loandepot or generate 29.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNFinance Holdings vs. Loandepot
Performance |
| Timeline |
| CNFinance Holdings |
| Loandepot |
CNFinance Holdings and Loandepot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNFinance Holdings and Loandepot
The main advantage of trading using opposite CNFinance Holdings and Loandepot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNFinance Holdings 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.| CNFinance Holdings vs. Guild Holdings Co | CNFinance Holdings vs. PennyMac Finl Svcs | CNFinance Holdings vs. Security National Financial | CNFinance Holdings vs. Encore Capital Group |
| Loandepot vs. Encore Capital Group | Loandepot vs. Federal Home Loan | Loandepot vs. CNFinance Holdings | Loandepot vs. Greystone Housing Impact |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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