Correlation Between Loandepot and Worldpay

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

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

Diversification Opportunities for Loandepot and Worldpay

0.0

Correlation Coefficient

Loandepot  Worldpay

Pay attention - limited upside

The 3 months correlation between Loandepot and Worldpay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Loandepot and Worldpay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldpay 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 Worldpay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldpay has no effect on the direction of Loandepot i.e., Loandepot and Worldpay go up and down completely randomly.

Pair Corralation between Loandepot and Worldpay

If you would invest (100.00) in Worldpay on February 2, 2024 and sell it today you would earn a total of  100.00  from holding Worldpay or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Loandepot  vs.  Worldpay

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 June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Worldpay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worldpay has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Worldpay is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Loandepot and Worldpay

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

The idea behind Loandepot and Worldpay 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.