Correlation Between Loandepot and Broadstone Net

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

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

Diversification Opportunities for Loandepot and Broadstone Net

0.36

Correlation Coefficient

Loandepot  Broadstone Net

Weak diversification

The 3 months correlation between Loandepot and Broadstone is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Loandepot and Broadstone Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadstone Net Lease and Loandepot 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 are associated (or correlated) with Broadstone Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadstone Net Lease has no effect on the direction of Loandepot i.e., Loandepot and Broadstone Net go up and down completely randomly.

Pair Corralation between Loandepot and Broadstone Net

Considering the 90-day investment horizon Loandepot is expected to under-perform the Broadstone Net. In addition to that, Loandepot is 2.66 times more volatile than Broadstone Net Lease. It trades about -0.31 of its total potential returns per unit of risk. Broadstone Net Lease is currently generating about -0.33 per unit of volatility. If you would invest  1,744  in Broadstone Net Lease on September 27, 2024 and sell it today you would lose (128.00) from holding Broadstone Net Lease or give up 7.34% of portfolio value over 90 days.

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

Loandepot  vs.  Broadstone Net Lease

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 weak 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.

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 unsteady 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.

Pair Trading with Loandepot and Broadstone Net

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

The idea behind Loandepot and Broadstone Net Lease 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.