Correlation Between Rocket Companies and Loans4Less
Can any of the company-specific risk be diversified away by investing in both Rocket Companies and Loans4Less 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 Rocket Companies and Loans4Less into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Companies and Loans4LessCom, you can compare the effects of market volatilities on Rocket Companies and Loans4Less 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 Rocket Companies with a short position of Loans4Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Companies and Loans4Less.
Diversification Opportunities for Rocket Companies and Loans4Less
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rocket and Loans4Less is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies and Loans4LessCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loans4LessCom and Rocket Companies 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 Rocket Companies are associated (or correlated) with Loans4Less. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loans4LessCom has no effect on the direction of Rocket Companies i.e., Rocket Companies and Loans4Less go up and down completely randomly.
Pair Corralation between Rocket Companies and Loans4Less
Considering the 90-day investment horizon Rocket Companies is expected to under-perform the Loans4Less. But the stock apears to be less risky and, when comparing its historical volatility, Rocket Companies is 4.4 times less risky than Loans4Less. The stock trades about -0.32 of its potential returns per unit of risk. The Loans4LessCom is currently generating about 0.22 of returns per unit of risk over similar time horizon. 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Companies vs. Loans4LessCom
Performance |
| Timeline |
| Rocket Companies |
| Loans4LessCom |
Rocket Companies and Loans4Less Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Companies and Loans4Less
The main advantage of trading using opposite Rocket Companies and Loans4Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Companies position performs unexpectedly, Loans4Less 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 Loans4Less will offset losses from the drop in Loans4Less' long position.| Rocket Companies vs. Loandepot | Rocket Companies vs. Mr Cooper Group | Rocket Companies vs. PennyMac Finl Svcs | Rocket Companies vs. Guild Holdings Co |
| Loans4Less vs. Guild Holdings Co | Loans4Less vs. Rocket Companies | Loans4Less vs. UWM Holdings Corp | Loans4Less vs. Mr Cooper Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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