Correlation Between Loandepot and Mind Medicine

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

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

Diversification Opportunities for Loandepot and Mind Medicine

0.09

Correlation Coefficient

Loandepot  Mind Medicine

Significant diversification

The 3 months correlation between Loandepot and Mind is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Loandepot and Mind Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Medicine 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 Mind Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Medicine has no effect on the direction of Loandepot i.e., Loandepot and Mind Medicine go up and down completely randomly.

Pair Corralation between Loandepot and Mind Medicine

Considering the 90-day investment horizon Loandepot is expected to generate 1.09 times more return on investment than Mind Medicine. However, Loandepot is 1.09 times more volatile than Mind Medicine. It trades about 0.05 of its potential returns per unit of risk. Mind Medicine is currently generating about 0.04 per unit of risk. If you would invest  161.00  in Loandepot on September 27, 2024 and sell it today you would earn a total of  30.00  from holding Loandepot or generate 18.63% return on investment over 90 days.

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

Loandepot  vs.  Mind Medicine

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.

Mind Medicine

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mind Medicine are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Mind Medicine exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loandepot and Mind Medicine

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

The idea behind Loandepot and Mind Medicine 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.