Correlation Between LOANDEPOT INC and Food Life

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

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

Diversification Opportunities for LOANDEPOT INC and Food Life

-0.03

Correlation Coefficient

LOANDEPOT INC  Food Life

Good diversification

The 3 months correlation between LOANDEPOT and Food is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and Food Life Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Food Life Companies and LOANDEPOT INC 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 LOANDEPOT INC A are associated (or correlated) with Food Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Food Life Companies has no effect on the direction of LOANDEPOT INC i.e., LOANDEPOT INC and Food Life go up and down completely randomly.

Pair Corralation between LOANDEPOT INC and Food Life

Assuming the 90 days horizon LOANDEPOT INC A is expected to under-perform the Food Life. In addition to that, LOANDEPOT INC is 2.04 times more volatile than Food Life Companies. It trades about -0.33 of its total potential returns per unit of risk. Food Life Companies is currently generating about -0.17 per unit of volatility. If you would invest  2,160  in Food Life Companies on October 1, 2024 and sell it today you would lose (100.00) from holding Food Life Companies or give up 4.63% of portfolio value over 90 days.

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

LOANDEPOT INC A  vs.  Food Life Companies

LOANDEPOT INC A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOANDEPOT INC A 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 basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Food Life Companies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Food Life Companies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Food Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LOANDEPOT INC and Food Life

The main advantage of trading using opposite LOANDEPOT INC and Food Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOANDEPOT INC position performs unexpectedly, Food Life 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 Food Life will offset losses from the drop in Food Life's long position.

The idea behind LOANDEPOT INC A and Food Life Companies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.