Correlation Between Timbercreek Financial and Velocity Financial
Can any of the company-specific risk be diversified away by investing in both Timbercreek Financial and Velocity Financial 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 Timbercreek Financial and Velocity Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timbercreek Financial Corp and Velocity Financial Llc, you can compare the effects of market volatilities on Timbercreek Financial and Velocity Financial 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 Timbercreek Financial with a short position of Velocity Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timbercreek Financial and Velocity Financial.
Diversification Opportunities for Timbercreek Financial and Velocity Financial
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Timbercreek and Velocity is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Timbercreek Financial Corp and Velocity Financial Llc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Velocity Financial Llc and Timbercreek Financial 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 Timbercreek Financial Corp are associated (or correlated) with Velocity Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Velocity Financial Llc has no effect on the direction of Timbercreek Financial i.e., Timbercreek Financial and Velocity Financial go up and down completely randomly.
Pair Corralation between Timbercreek Financial and Velocity Financial
Assuming the 90 days horizon Timbercreek Financial Corp is expected to generate 1.34 times more return on investment than Velocity Financial. However, Timbercreek Financial is 1.34 times more volatile than Velocity Financial Llc. It trades about -0.04 of its potential returns per unit of risk. Velocity Financial Llc is currently generating about -0.27 per unit of risk. If you would invest 477.00 in Timbercreek Financial Corp on October 20, 2024 and sell it today you would lose (8.00) from holding Timbercreek Financial Corp or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Timbercreek Financial Corp vs. Velocity Financial Llc
Performance |
| Timeline |
| Timbercreek Financial |
| Velocity Financial Llc |
Timbercreek Financial and Velocity Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timbercreek Financial and Velocity Financial
The main advantage of trading using opposite Timbercreek Financial and Velocity Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timbercreek Financial position performs unexpectedly, Velocity Financial 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 Velocity Financial will offset losses from the drop in Velocity Financial's long position.| Timbercreek Financial vs. PennyMac Finl Svcs | Timbercreek Financial vs. Encore Capital Group | Timbercreek Financial vs. Rocket Companies | Timbercreek Financial vs. Loandepot |
| Velocity Financial vs. Guild Holdings Co | Velocity Financial vs. Mr Cooper Group | Velocity Financial vs. Encore Capital Group | Velocity Financial vs. CNFinance Holdings |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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