Correlation Between Royal Bank and Loandepot
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Loandepot 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 Royal Bank and Loandepot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Bank of and Loandepot, you can compare the effects of market volatilities on Royal Bank and Loandepot 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 Royal Bank with a short position of Loandepot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Loandepot.
Diversification Opportunities for Royal Bank and Loandepot
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Royal and Loandepot is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and Royal Bank 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 Royal Bank of are associated (or correlated) with Loandepot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loandepot has no effect on the direction of Royal Bank i.e., Royal Bank and Loandepot go up and down completely randomly.
Pair Corralation between Royal Bank and Loandepot
Allowing for the 90-day total investment horizon Royal Bank is expected to generate 1.14 times less return on investment than Loandepot. But when comparing it to its historical volatility, Royal Bank of is 4.49 times less risky than Loandepot. It trades about 0.1 of its potential returns per unit of risk. Loandepot is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 213.00 in Loandepot on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Loandepot or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Loandepot
Performance |
| Timeline |
| Royal Bank |
| Loandepot |
Royal Bank and Loandepot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Loandepot
The main advantage of trading using opposite Royal Bank and Loandepot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Loandepot 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 will offset losses from the drop in Loandepot's long position.| Royal Bank vs. Citigroup | Royal Bank vs. Toronto Dominion Bank | Royal Bank vs. Nu Holdings | Royal Bank vs. HSBC Holdings PLC |
| Loandepot vs. CNFinance Holdings | Loandepot vs. Security National Financial | Loandepot vs. Encore Capital Group | Loandepot vs. UWM Holdings Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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