Correlation Between Dixons Carphone and Loandepot
Can any of the company-specific risk be diversified away by investing in both Dixons Carphone 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 Dixons Carphone and Loandepot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dixons Carphone plc and Loandepot, you can compare the effects of market volatilities on Dixons Carphone 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 Dixons Carphone with a short position of Loandepot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dixons Carphone and Loandepot.
Diversification Opportunities for Dixons Carphone and Loandepot
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dixons and Loandepot is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dixons Carphone plc and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and Dixons Carphone 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 Dixons Carphone plc 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 Dixons Carphone i.e., Dixons Carphone and Loandepot go up and down completely randomly.
Pair Corralation between Dixons Carphone and Loandepot
Assuming the 90 days horizon Dixons Carphone plc is expected to generate 0.83 times more return on investment than Loandepot. However, Dixons Carphone plc is 1.2 times less risky than Loandepot. It trades about 0.08 of its potential returns per unit of risk. Loandepot is currently generating about -0.01 per unit of risk. If you would invest 59.00 in Dixons Carphone plc on November 3, 2024 and sell it today you would earn a total of 54.00 from holding Dixons Carphone plc or generate 91.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Dixons Carphone plc vs. Loandepot
Performance |
| Timeline |
| Dixons Carphone plc |
| Loandepot |
Dixons Carphone and Loandepot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dixons Carphone and Loandepot
The main advantage of trading using opposite Dixons Carphone and Loandepot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dixons Carphone 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.| Dixons Carphone vs. Academy Sports Outdoors | Dixons Carphone vs. flyExclusive, | Dixons Carphone vs. The Gap, | Dixons Carphone vs. Sun Country Airlines |
| Loandepot vs. CNFinance Holdings | Loandepot vs. Security National Financial | Loandepot vs. Encore Capital Group | Loandepot vs. UWM Holdings Corp |
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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