Correlation Between Mr Cooper and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Mr Cooper and Merchants Bancorp 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 Merchants Bancorp 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 Merchants Bancorp, you can compare the effects of market volatilities on Mr Cooper and Merchants Bancorp 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 Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mr Cooper and Merchants Bancorp.
Diversification Opportunities for Mr Cooper and Merchants Bancorp
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between COOP and Merchants is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mr Cooper Group and Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Bancorp 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 Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Mr Cooper i.e., Mr Cooper and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Mr Cooper and Merchants Bancorp
Given the investment horizon of 90 days Mr Cooper Group is expected to generate 0.44 times more return on investment than Merchants Bancorp. However, Mr Cooper Group is 2.28 times less risky than Merchants Bancorp. It trades about 0.08 of its potential returns per unit of risk. Merchants Bancorp is currently generating about -0.03 per unit of risk. If you would invest 9,136 in Mr Cooper Group on September 5, 2024 and sell it today you would earn a total of 506.00 from holding Mr Cooper Group or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Mr Cooper Group vs. Merchants Bancorp
Performance |
| Timeline |
| Mr Cooper Group |
| Merchants Bancorp |
Mr Cooper and Merchants Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mr Cooper and Merchants Bancorp
The main advantage of trading using opposite Mr Cooper and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mr Cooper position performs unexpectedly, Merchants Bancorp 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp'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 |
| Merchants Bancorp vs. Mr Cooper Group | Merchants Bancorp vs. Security National Financial | Merchants Bancorp vs. Encore Capital Group | Merchants Bancorp vs. Timbercreek 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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