Correlation Between Velocity Financial and Loandepot
Can any of the company-specific risk be diversified away by investing in both Velocity Financial 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 Velocity Financial and Loandepot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Velocity Financial Llc and Loandepot, you can compare the effects of market volatilities on Velocity Financial 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 Velocity Financial with a short position of Loandepot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velocity Financial and Loandepot.
Diversification Opportunities for Velocity Financial and Loandepot
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Velocity and Loandepot is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Velocity Financial Llc and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and Velocity Financial 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 Velocity Financial Llc 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 Velocity Financial i.e., Velocity Financial and Loandepot go up and down completely randomly.
Pair Corralation between Velocity Financial and Loandepot
Considering the 90-day investment horizon Velocity Financial is expected to generate 1.49 times less return on investment than Loandepot. But when comparing it to its historical volatility, Velocity Financial Llc is 6.16 times less risky than Loandepot. It trades about 0.3 of its potential returns per unit of risk. Loandepot is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 217.00 in Loandepot on August 30, 2024 and sell it today you would earn a total of 13.00 from holding Loandepot or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Velocity Financial Llc vs. Loandepot
Performance |
| Timeline |
| Velocity Financial Llc |
| Loandepot |
Velocity Financial and Loandepot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Velocity Financial and Loandepot
The main advantage of trading using opposite Velocity Financial and Loandepot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velocity Financial 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.| Velocity Financial vs. Guild Holdings Co | Velocity Financial vs. Mr Cooper Group | Velocity Financial vs. Encore Capital Group | Velocity Financial vs. CNFinance Holdings |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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