Correlation Between Merchants Bancorp and Mr Cooper
Can any of the company-specific risk be diversified away by investing in both Merchants Bancorp 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 Merchants Bancorp and Mr Cooper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merchants Bancorp and Mr Cooper Group, you can compare the effects of market volatilities on Merchants Bancorp 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 Merchants Bancorp with a short position of Mr Cooper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Bancorp and Mr Cooper.
Diversification Opportunities for Merchants Bancorp and Mr Cooper
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merchants and COOP is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Bancorp 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 Merchants Bancorp 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 Merchants Bancorp 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 Merchants Bancorp i.e., Merchants Bancorp and Mr Cooper go up and down completely randomly.
Pair Corralation between Merchants Bancorp and Mr Cooper
Given the investment horizon of 90 days Merchants Bancorp is expected to generate 1.43 times less return on investment than Mr Cooper. In addition to that, Merchants Bancorp is 1.3 times more volatile than Mr Cooper Group. It trades about 0.05 of its total potential returns per unit of risk. Mr Cooper Group is currently generating about 0.1 per unit of volatility. If you would invest 4,107 in Mr Cooper Group on September 5, 2024 and sell it today you would earn a total of 5,586 from holding Mr Cooper Group or generate 136.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Merchants Bancorp vs. Mr Cooper Group
Performance |
| Timeline |
| Merchants Bancorp |
| Mr Cooper Group |
Merchants Bancorp and Mr Cooper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Bancorp and Mr Cooper
The main advantage of trading using opposite Merchants Bancorp and Mr Cooper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Bancorp 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.| Merchants Bancorp vs. Mr Cooper Group | Merchants Bancorp vs. Security National Financial | Merchants Bancorp vs. Encore Capital Group | Merchants Bancorp vs. Timbercreek Financial Corp |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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