Correlation Between Steven Madden and Loandepot
Can any of the company-specific risk be diversified away by investing in both Steven Madden and Loandepot 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 Steven Madden and Loandepot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steven Madden and Loandepot, you can compare the effects of market volatilities on Steven Madden and Loandepot 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 Steven Madden with a short position of Loandepot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Loandepot.
Diversification Opportunities for Steven Madden and Loandepot
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steven and Loandepot is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Loandepot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loandepot and Steven Madden 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 Steven Madden are associated (or correlated) with Loandepot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loandepot has no effect on the direction of Steven Madden i.e., Steven Madden and Loandepot go up and down completely randomly.
Pair Corralation between Steven Madden and Loandepot
Given the investment horizon of 90 days Steven Madden is expected to generate 0.37 times more return on investment than Loandepot. However, Steven Madden is 2.72 times less risky than Loandepot. It trades about 0.18 of its potential returns per unit of risk. Loandepot is currently generating about -0.1 per unit of risk. If you would invest 3,971 in Steven Madden on February 21, 2024 and sell it today you would earn a total of 213.00 from holding Steven Madden or generate 5.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Steven Madden vs. Loandepot
Performance |
Timeline |
Steven Madden |
Loandepot |
Steven Madden and Loandepot Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Steven Madden and Loandepot
The main advantage of trading using opposite Steven Madden and Loandepot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Loandepot 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 will offset losses from the drop in Loandepot's long position.The idea behind Steven Madden and Loandepot 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.Loandepot vs. Ocwen Financial | Loandepot vs. CNFinance Holdings | Loandepot vs. Security National Financial | Loandepot vs. Encore Capital Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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