Correlation Between Capital One and Mr Cooper
Can any of the company-specific risk be diversified away by investing in both Capital One and Mr Cooper 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 Capital One and Mr Cooper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and Mr Cooper Group, you can compare the effects of market volatilities on Capital One and Mr Cooper 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 Capital One with a short position of Mr Cooper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Mr Cooper.
Diversification Opportunities for Capital One and Mr Cooper
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and COOP is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Mr Cooper Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mr Cooper Group and Capital One 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 Capital One Financial are associated (or correlated) with Mr Cooper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mr Cooper Group has no effect on the direction of Capital One i.e., Capital One and Mr Cooper go up and down completely randomly.
Pair Corralation between Capital One and Mr Cooper
Considering the 90-day investment horizon Capital One Financial is expected to generate 2.06 times more return on investment than Mr Cooper. However, Capital One is 2.06 times more volatile than Mr Cooper Group. It trades about 0.18 of its potential returns per unit of risk. Mr Cooper Group is currently generating about 0.26 per unit of risk. If you would invest 16,484 in Capital One Financial on August 27, 2024 and sell it today you would earn a total of 2,222 from holding Capital One Financial or generate 13.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Mr Cooper Group
Performance |
| Timeline |
| Capital One Financial |
| Mr Cooper Group |
Capital One and Mr Cooper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Mr Cooper
The main advantage of trading using opposite Capital One and Mr Cooper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Mr Cooper 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 Mr Cooper will offset losses from the drop in Mr Cooper's long position.| Capital One vs. Mastercard | Capital One vs. Visa Class A | Capital One vs. PayPal Holdings | Capital One vs. Ally Financial |
| Mr Cooper vs. National Bank Holdings | Mr Cooper vs. Community West Bancshares | Mr Cooper vs. Financial Institutions | Mr Cooper vs. Kearny Financial Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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