Correlation Between Loandepot and Rocket Companies
Can any of the company-specific risk be diversified away by investing in both Loandepot and Rocket Companies 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 and Rocket Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loandepot and Rocket Companies, you can compare the effects of market volatilities on Loandepot and Rocket Companies 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 with a short position of Rocket Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loandepot and Rocket Companies.
Diversification Opportunities for Loandepot and Rocket Companies
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loandepot and Rocket is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Loandepot and Rocket Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Companies and Loandepot 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 are associated (or correlated) with Rocket Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Companies has no effect on the direction of Loandepot i.e., Loandepot and Rocket Companies go up and down completely randomly.
Pair Corralation between Loandepot and Rocket Companies
Considering the 90-day investment horizon Loandepot is expected to under-perform the Rocket Companies. In addition to that, Loandepot is 1.13 times more volatile than Rocket Companies. It trades about -0.23 of its total potential returns per unit of risk. Rocket Companies is currently generating about 0.28 per unit of volatility. If you would invest 1,085 in Rocket Companies on November 3, 2024 and sell it today you would earn a total of 175.00 from holding Rocket Companies or generate 16.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Loandepot vs. Rocket Companies
Performance |
| Timeline |
| Loandepot |
| Rocket Companies |
Loandepot and Rocket Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loandepot and Rocket Companies
The main advantage of trading using opposite Loandepot and Rocket Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loandepot position performs unexpectedly, Rocket Companies 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 Rocket Companies will offset losses from the drop in Rocket Companies' long position.| Loandepot vs. CNFinance Holdings | Loandepot vs. Security National Financial | Loandepot vs. Encore Capital Group | Loandepot vs. UWM Holdings Corp |
| Rocket Companies vs. Loandepot | Rocket Companies vs. Mr Cooper Group | Rocket Companies vs. PennyMac Finl Svcs | Rocket Companies vs. Guild Holdings Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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