Correlation Between UWM Holdings and Federal National
Can any of the company-specific risk be diversified away by investing in both UWM Holdings and Federal National 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 UWM Holdings and Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UWM Holdings Corp and Federal National Mortgage, you can compare the effects of market volatilities on UWM Holdings and Federal National 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 UWM Holdings with a short position of Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of UWM Holdings and Federal National.
Diversification Opportunities for UWM Holdings and Federal National
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UWM and Federal is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding UWM Holdings Corp and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage and UWM Holdings 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 UWM Holdings Corp are associated (or correlated) with Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of UWM Holdings i.e., UWM Holdings and Federal National go up and down completely randomly.
Pair Corralation between UWM Holdings and Federal National
Given the investment horizon of 90 days UWM Holdings Corp is expected to under-perform the Federal National. But the stock apears to be less risky and, when comparing its historical volatility, UWM Holdings Corp is 4.1 times less risky than Federal National. The stock trades about -0.15 of its potential returns per unit of risk. The Federal National Mortgage is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 166.00 in Federal National Mortgage on August 24, 2024 and sell it today you would earn a total of 150.00 from holding Federal National Mortgage or generate 90.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UWM Holdings Corp vs. Federal National Mortgage
Performance |
| Timeline |
| UWM Holdings Corp |
| Federal National Mortgage |
UWM Holdings and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UWM Holdings and Federal National
The main advantage of trading using opposite UWM Holdings and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UWM Holdings position performs unexpectedly, Federal National 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 Federal National will offset losses from the drop in Federal National's long position.| UWM Holdings vs. Loandepot | UWM Holdings vs. Mr Cooper Group | UWM Holdings vs. PennyMac Finl Svcs | UWM Holdings vs. Walker Dunlop |
| Federal National vs. The Coca Cola | Federal National vs. HNI Corp | Federal National vs. SNDL Inc | Federal National vs. LGI Homes |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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