Correlation Between Financial Institutions and Mr Cooper
Can any of the company-specific risk be diversified away by investing in both Financial Institutions 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 Financial Institutions and Mr Cooper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Institutions and Mr Cooper Group, you can compare the effects of market volatilities on Financial Institutions 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 Financial Institutions with a short position of Mr Cooper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Institutions and Mr Cooper.
Diversification Opportunities for Financial Institutions and Mr Cooper
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Financial and COOP is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Financial Institutions 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 Financial Institutions 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 Financial Institutions 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 Financial Institutions i.e., Financial Institutions and Mr Cooper go up and down completely randomly.
Pair Corralation between Financial Institutions and Mr Cooper
Given the investment horizon of 90 days Financial Institutions is expected to generate 1.46 times more return on investment than Mr Cooper. However, Financial Institutions is 1.46 times more volatile than Mr Cooper Group. It trades about 0.05 of its potential returns per unit of risk. Mr Cooper Group is currently generating about 0.06 per unit of risk. If you would invest 2,560 in Financial Institutions on August 29, 2024 and sell it today you would earn a total of 177.00 from holding Financial Institutions or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Institutions vs. Mr Cooper Group
Performance |
| Timeline |
| Financial Institutions |
| Mr Cooper Group |
Financial Institutions and Mr Cooper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Institutions and Mr Cooper
The main advantage of trading using opposite Financial Institutions and Mr Cooper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Institutions 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.| Financial Institutions vs. First Community | Financial Institutions vs. Community West Bancshares | Financial Institutions vs. First Financial Northwest | Financial Institutions vs. First Northwest Bancorp |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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