Correlation Between Broadstone Net and Loandepot

Can any of the company-specific risk be diversified away by investing in both Broadstone Net 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 Broadstone Net and Loandepot into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broadstone Net Lease and Loandepot, you can compare the effects of market volatilities on Broadstone Net 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 Broadstone Net with a short position of Loandepot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadstone Net and Loandepot.

Diversification Opportunities for Broadstone Net and Loandepot

0.39

Correlation Coefficient

Broadstone Net  Loandepot

Weak diversification

The 3 months correlation between Broadstone and Loandepot is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and Broadstone Net 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 Broadstone Net Lease 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 Broadstone Net i.e., Broadstone Net and Loandepot go up and down completely randomly.

Pair Corralation between Broadstone Net and Loandepot

Considering the 90-day investment horizon Broadstone Net Lease is expected to generate 0.25 times more return on investment than Loandepot. However, Broadstone Net Lease is 4.08 times less risky than Loandepot. It trades about -0.21 of its potential returns per unit of risk. Loandepot is currently generating about -0.11 per unit of risk. If you would invest  1,855  in Broadstone Net Lease on September 27, 2024 and sell it today you would lose (242.00) from holding Broadstone Net Lease or give up 13.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Broadstone Net Lease  vs.  Loandepot

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Loandepot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loandepot has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Broadstone Net and Loandepot

The main advantage of trading using opposite Broadstone Net and Loandepot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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.

The idea behind Broadstone Net Lease and Loandepot pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.