Correlation Between Hawkins and Loandepot

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

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

Diversification Opportunities for Hawkins and Loandepot

-0.05

Correlation Coefficient

Hawkins  Loandepot

Good diversification

The 3 months correlation between Hawkins and Loandepot is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and Hawkins 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 Hawkins 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 Hawkins i.e., Hawkins and Loandepot go up and down completely randomly.

Pair Corralation between Hawkins and Loandepot

Given the investment horizon of 90 days Hawkins is expected to generate 0.64 times more return on investment than Loandepot. However, Hawkins is 1.57 times less risky than Loandepot. It trades about 0.01 of its potential returns per unit of risk. Loandepot is currently generating about -0.1 per unit of risk. If you would invest  11,984  in Hawkins on September 21, 2024 and sell it today you would lose (41.00) from holding Hawkins or give up 0.34% of portfolio value over 90 days.

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

Hawkins  vs.  Loandepot

Hawkins

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the 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 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 Hawkins and Loandepot

The main advantage of trading using opposite Hawkins and Loandepot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins 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 Hawkins 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.