Correlation Between Deutsche Pfandbriefbank and LOANDEPOT INC

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

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

Diversification Opportunities for Deutsche Pfandbriefbank and LOANDEPOT INC

-0.1

Correlation Coefficient

Deutsche Pfandbriefbank  LOANDEPOT INC

Good diversification

The 3 months correlation between Deutsche and LOANDEPOT is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Pfandbriefbank AG and LOANDEPOT INC A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOANDEPOT INC A and Deutsche Pfandbriefbank 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 Deutsche Pfandbriefbank AG are associated (or correlated) with LOANDEPOT INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOANDEPOT INC A has no effect on the direction of Deutsche Pfandbriefbank i.e., Deutsche Pfandbriefbank and LOANDEPOT INC go up and down completely randomly.

Pair Corralation between Deutsche Pfandbriefbank and LOANDEPOT INC

Assuming the 90 days trading horizon Deutsche Pfandbriefbank AG is expected to under-perform the LOANDEPOT INC. But the stock apears to be less risky and, when comparing its historical volatility, Deutsche Pfandbriefbank AG is 3.67 times less risky than LOANDEPOT INC. The stock trades about -0.28 of its potential returns per unit of risk. The LOANDEPOT INC A is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  185.00  in LOANDEPOT INC A on August 12, 2024 and sell it today you would earn a total of  53.00  from holding LOANDEPOT INC A or generate 28.65% return on investment over 90 days.

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

Deutsche Pfandbriefbank AG  vs.  LOANDEPOT INC A

Deutsche Pfandbriefbank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Pfandbriefbank AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Deutsche Pfandbriefbank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

LOANDEPOT INC A

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LOANDEPOT INC A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LOANDEPOT INC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Deutsche Pfandbriefbank and LOANDEPOT INC

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

The idea behind Deutsche Pfandbriefbank AG and LOANDEPOT INC A 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.