Correlation Between Rocket Companies and UWM Holdings
Can any of the company-specific risk be diversified away by investing in both Rocket Companies 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 Rocket Companies and UWM Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Companies and UWM Holdings Corp, you can compare the effects of market volatilities on Rocket Companies 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 Rocket Companies with a short position of UWM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Companies and UWM Holdings.
Diversification Opportunities for Rocket Companies and UWM Holdings
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rocket and UWM is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies 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 Rocket Companies 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 Rocket Companies 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 Rocket Companies i.e., Rocket Companies and UWM Holdings go up and down completely randomly.
Pair Corralation between Rocket Companies and UWM Holdings
Considering the 90-day investment horizon Rocket Companies is expected to generate 1.0 times less return on investment than UWM Holdings. In addition to that, Rocket Companies is 1.06 times more volatile than UWM Holdings Corp. It trades about 0.05 of its total potential returns per unit of risk. UWM Holdings Corp is currently generating about 0.05 per unit of volatility. If you would invest 374.00 in UWM Holdings Corp on November 19, 2024 and sell it today you would earn a total of 265.00 from holding UWM Holdings Corp or generate 70.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Companies vs. UWM Holdings Corp
Performance |
| Timeline |
| Rocket Companies |
| UWM Holdings Corp |
Rocket Companies and UWM Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Companies and UWM Holdings
The main advantage of trading using opposite Rocket Companies and UWM Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Companies 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.| Rocket Companies vs. Loandepot | Rocket Companies vs. Mr Cooper Group | Rocket Companies vs. PennyMac Finl Svcs | Rocket Companies vs. Guild Holdings Co |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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