Correlation Between Loans4Less and Guild Holdings
Can any of the company-specific risk be diversified away by investing in both Loans4Less and Guild 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 Loans4Less and Guild Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loans4LessCom and Guild Holdings Co, you can compare the effects of market volatilities on Loans4Less and Guild 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 Loans4Less with a short position of Guild Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loans4Less and Guild Holdings.
Diversification Opportunities for Loans4Less and Guild Holdings
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loans4Less and Guild is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Loans4LessCom and Guild Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Holdings and Loans4Less 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 Loans4LessCom are associated (or correlated) with Guild Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Holdings has no effect on the direction of Loans4Less i.e., Loans4Less and Guild Holdings go up and down completely randomly.
Pair Corralation between Loans4Less and Guild Holdings
Given the investment horizon of 90 days Loans4LessCom is expected to generate 5.99 times more return on investment than Guild Holdings. However, Loans4Less is 5.99 times more volatile than Guild Holdings Co. It trades about 0.22 of its potential returns per unit of risk. Guild Holdings Co is currently generating about -0.06 per unit of risk. If you would invest 2.00 in Loans4LessCom on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Loans4LessCom or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loans4LessCom vs. Guild Holdings Co
Performance |
| Timeline |
| Loans4LessCom |
| Guild Holdings |
Loans4Less and Guild Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loans4Less and Guild Holdings
The main advantage of trading using opposite Loans4Less and Guild Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loans4Less position performs unexpectedly, Guild 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 Guild Holdings will offset losses from the drop in Guild Holdings' long position.| Loans4Less vs. Guild Holdings Co | Loans4Less vs. Rocket Companies | Loans4Less vs. UWM Holdings Corp | Loans4Less vs. Mr Cooper Group |
| Guild Holdings vs. Mr Cooper Group | Guild Holdings vs. Encore Capital Group | Guild Holdings vs. CNFinance Holdings | Guild Holdings vs. Security National Financial |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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