Correlation Between Mr Cooper and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Mr Cooper and Federal Agricultural 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 Mr Cooper and Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mr Cooper Group and Federal Agricultural Mortgage, you can compare the effects of market volatilities on Mr Cooper and Federal Agricultural 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 Mr Cooper with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mr Cooper and Federal Agricultural.
Diversification Opportunities for Mr Cooper and Federal Agricultural
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between COOP and Federal is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mr Cooper Group and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and Mr Cooper 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 Mr Cooper Group are associated (or correlated) with Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Mr Cooper i.e., Mr Cooper and Federal Agricultural go up and down completely randomly.
Pair Corralation between Mr Cooper and Federal Agricultural
Given the investment horizon of 90 days Mr Cooper Group is expected to generate 1.0 times more return on investment than Federal Agricultural. However, Mr Cooper is 1.0 times more volatile than Federal Agricultural Mortgage. It trades about 0.11 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.07 per unit of risk. If you would invest 4,905 in Mr Cooper Group on September 2, 2024 and sell it today you would earn a total of 4,962 from holding Mr Cooper Group or generate 101.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mr Cooper Group vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| Mr Cooper Group |
| Federal Agricultural |
Mr Cooper and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mr Cooper and Federal Agricultural
The main advantage of trading using opposite Mr Cooper and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mr Cooper position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's long position.| Mr Cooper vs. Guild Holdings Co | Mr Cooper vs. Encore Capital Group | Mr Cooper vs. CNFinance Holdings | Mr Cooper vs. Velocity Financial Llc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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