Correlation Between Velocity Financial and Mr Cooper
Can any of the company-specific risk be diversified away by investing in both Velocity Financial 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 Velocity Financial and Mr Cooper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Velocity Financial Llc and Mr Cooper Group, you can compare the effects of market volatilities on Velocity Financial 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 Velocity Financial with a short position of Mr Cooper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velocity Financial and Mr Cooper.
Diversification Opportunities for Velocity Financial and Mr Cooper
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Velocity and COOP is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Velocity Financial Llc 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 Velocity 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 Velocity Financial Llc 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 Velocity Financial i.e., Velocity Financial and Mr Cooper go up and down completely randomly.
Pair Corralation between Velocity Financial and Mr Cooper
Considering the 90-day investment horizon Velocity Financial is expected to generate 1.61 times less return on investment than Mr Cooper. But when comparing it to its historical volatility, Velocity Financial Llc is 2.03 times less risky than Mr Cooper. It trades about 0.33 of its potential returns per unit of risk. Mr Cooper Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 9,147 in Mr Cooper Group on August 28, 2024 and sell it today you would earn a total of 919.00 from holding Mr Cooper Group or generate 10.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Velocity Financial Llc vs. Mr Cooper Group
Performance |
| Timeline |
| Velocity Financial Llc |
| Mr Cooper Group |
Velocity Financial and Mr Cooper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Velocity Financial and Mr Cooper
The main advantage of trading using opposite Velocity Financial and Mr Cooper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velocity Financial 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.| Velocity Financial vs. National Bank Holdings | Velocity Financial vs. Community West Bancshares | Velocity Financial vs. Financial Institutions | Velocity Financial vs. Kearny Financial Corp |
| Mr Cooper vs. National Bank Holdings | Mr Cooper vs. Community West Bancshares | Mr Cooper vs. Financial Institutions | Mr Cooper vs. Kearny Financial Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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