Correlation Between LOANDEPOT INC and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both LOANDEPOT INC and NMI Holdings 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 LOANDEPOT INC and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOANDEPOT INC A and NMI Holdings, you can compare the effects of market volatilities on LOANDEPOT INC and NMI Holdings 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 LOANDEPOT INC with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOANDEPOT INC and NMI Holdings.
Diversification Opportunities for LOANDEPOT INC and NMI Holdings
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between LOANDEPOT and NMI is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and LOANDEPOT INC 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 LOANDEPOT INC A are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of LOANDEPOT INC i.e., LOANDEPOT INC and NMI Holdings go up and down completely randomly.
Pair Corralation between LOANDEPOT INC and NMI Holdings
Assuming the 90 days horizon LOANDEPOT INC A is expected to generate 2.41 times more return on investment than NMI Holdings. However, LOANDEPOT INC is 2.41 times more volatile than NMI Holdings. It trades about 0.14 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.12 per unit of risk. If you would invest 180.00 in LOANDEPOT INC A on August 30, 2024 and sell it today you would earn a total of 30.00 from holding LOANDEPOT INC A or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOANDEPOT INC A vs. NMI Holdings
Performance |
| Timeline |
| LOANDEPOT INC A |
| NMI Holdings |
LOANDEPOT INC and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOANDEPOT INC and NMI Holdings
The main advantage of trading using opposite LOANDEPOT INC and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOANDEPOT INC position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| LOANDEPOT INC vs. AUSTEVOLL SEAFOOD | LOANDEPOT INC vs. Algonquin Power Utilities | LOANDEPOT INC vs. Tyson Foods | LOANDEPOT INC vs. Charoen Pokphand Foods |
| NMI Holdings vs. Perseus Mining Limited | NMI Holdings vs. CVW CLEANTECH INC | NMI Holdings vs. Warner Music Group | NMI Holdings vs. Tencent Music Entertainment |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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