Correlation Between Home Capital and UWM Holdings
Can any of the company-specific risk be diversified away by investing in both Home Capital 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 Home Capital and UWM Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Capital Group and UWM Holdings Corp, you can compare the effects of market volatilities on Home Capital 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 Home Capital with a short position of UWM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and UWM Holdings.
Diversification Opportunities for Home Capital and UWM Holdings
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and UWM is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Group 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 Home Capital 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 Home Capital Group 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 Home Capital i.e., Home Capital and UWM Holdings go up and down completely randomly.
Pair Corralation between Home Capital and UWM Holdings
Assuming the 90 days horizon Home Capital is expected to generate 5.36 times less return on investment than UWM Holdings. But when comparing it to its historical volatility, Home Capital Group is 4.2 times less risky than UWM Holdings. It trades about 0.04 of its potential returns per unit of risk. UWM Holdings Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 419.00 in UWM Holdings Corp on September 3, 2024 and sell it today you would earn a total of 237.00 from holding UWM Holdings Corp or generate 56.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 30.71% |
| Values | Daily Returns |
Home Capital Group vs. UWM Holdings Corp
Performance |
| Timeline |
| Home Capital Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| UWM Holdings Corp |
Home Capital and UWM Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Capital and UWM Holdings
The main advantage of trading using opposite Home Capital and UWM Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Capital 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.| Home Capital vs. Guild Holdings Co | Home Capital vs. Rocket Companies | Home Capital vs. UWM Holdings Corp | Home Capital vs. Mr Cooper Group |
| UWM Holdings vs. Loandepot | UWM Holdings vs. Mr Cooper Group | UWM Holdings vs. PennyMac Finl Svcs | UWM Holdings vs. Walker Dunlop |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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