Correlation Between Expand Energy and Loandepot

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

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

Diversification Opportunities for Expand Energy and Loandepot

-0.57

Correlation Coefficient

Expand Energy  Loandepot

Excellent diversification

The 3 months correlation between Expand and Loandepot is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Expand Energy and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and Expand Energy 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 Expand Energy 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 Expand Energy i.e., Expand Energy and Loandepot go up and down completely randomly.

Pair Corralation between Expand Energy and Loandepot

Assuming the 90 days horizon Expand Energy is expected to generate 0.65 times more return on investment than Loandepot. However, Expand Energy is 1.53 times less risky than Loandepot. It trades about 0.26 of its potential returns per unit of risk. Loandepot is currently generating about -0.1 per unit of risk. If you would invest  5,684  in Expand Energy on September 16, 2024 and sell it today you would earn a total of  3,337  from holding Expand Energy or generate 58.71% return on investment over 90 days.

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

Expand Energy  vs.  Loandepot

Expand Energy

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expand Energy are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Expand Energy showed solid returns over the last few months and may actually be approaching a breakup point.

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 fragile 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 Expand Energy and Loandepot

The main advantage of trading using opposite Expand Energy and Loandepot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expand Energy 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 Expand Energy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.