Correlation Between Hitachi Construction and LOANDEPOT INC
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction 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 Hitachi Construction and LOANDEPOT INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi Construction Machinery and LOANDEPOT INC A, you can compare the effects of market volatilities on Hitachi Construction 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 Hitachi Construction with a short position of LOANDEPOT INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and LOANDEPOT INC.
Diversification Opportunities for Hitachi Construction and LOANDEPOT INC
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hitachi and LOANDEPOT is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery 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 Hitachi Construction 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 Hitachi Construction Machinery 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 Hitachi Construction i.e., Hitachi Construction and LOANDEPOT INC go up and down completely randomly.
Pair Corralation between Hitachi Construction and LOANDEPOT INC
Assuming the 90 days horizon Hitachi Construction is expected to generate 1.15 times less return on investment than LOANDEPOT INC. But when comparing it to its historical volatility, Hitachi Construction Machinery is 2.4 times less risky than LOANDEPOT INC. It trades about 0.02 of its potential returns per unit of risk. LOANDEPOT INC A is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 238.00 in LOANDEPOT INC A on October 28, 2024 and sell it today you would lose (72.00) from holding LOANDEPOT INC A or give up 30.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. LOANDEPOT INC A
Performance |
| Timeline |
| Hitachi Construction |
| LOANDEPOT INC A |
Hitachi Construction and LOANDEPOT INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and LOANDEPOT INC
The main advantage of trading using opposite Hitachi Construction and LOANDEPOT INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction 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.| Hitachi Construction vs. HUTCHISON TELECOMM | Hitachi Construction vs. China Communications Services | Hitachi Construction vs. SK TELECOM TDADR | Hitachi Construction vs. Iridium Communications |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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