Correlation Between Groupon and UWM Holdings
Can any of the company-specific risk be diversified away by investing in both Groupon and UWM Holdings 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 Groupon and UWM Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groupon and UWM Holdings Corp, you can compare the effects of market volatilities on Groupon and UWM Holdings 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 Groupon with a short position of UWM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupon and UWM Holdings.
Diversification Opportunities for Groupon and UWM Holdings
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Groupon and UWM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Groupon and UWM Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UWM Holdings Corp and Groupon 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 Groupon are associated (or correlated) with UWM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UWM Holdings Corp has no effect on the direction of Groupon i.e., Groupon and UWM Holdings go up and down completely randomly.
Pair Corralation between Groupon and UWM Holdings
Given the investment horizon of 90 days Groupon is expected to under-perform the UWM Holdings. In addition to that, Groupon is 2.47 times more volatile than UWM Holdings Corp. It trades about -0.02 of its total potential returns per unit of risk. UWM Holdings Corp is currently generating about 0.0 per unit of volatility. If you would invest 663.00 in UWM Holdings Corp on August 29, 2024 and sell it today you would lose (7.00) from holding UWM Holdings Corp or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Groupon vs. UWM Holdings Corp
Performance |
| Timeline |
| Groupon |
| UWM Holdings Corp |
Groupon and UWM Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groupon and UWM Holdings
The main advantage of trading using opposite Groupon and UWM Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groupon position performs unexpectedly, UWM Holdings 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 UWM Holdings will offset losses from the drop in UWM Holdings' long position.The idea behind Groupon and UWM Holdings Corp 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.| UWM Holdings vs. American International Group | UWM Holdings vs. Groupon | UWM Holdings vs. HUMANA INC | UWM Holdings vs. Aquagold International |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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