Correlation Between Mr Cooper and MEDICAL FACILITIES

Can any of the company-specific risk be diversified away by investing in both Mr Cooper and MEDICAL FACILITIES 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 Mr Cooper and MEDICAL FACILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mr Cooper Group and MEDICAL FACILITIES NEW, you can compare the effects of market volatilities on Mr Cooper and MEDICAL FACILITIES 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 Mr Cooper with a short position of MEDICAL FACILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mr Cooper and MEDICAL FACILITIES.

Diversification Opportunities for Mr Cooper and MEDICAL FACILITIES

0.51

Correlation Coefficient

Mr Cooper  MEDICAL FACILITIES

Very weak diversification

The 3 months correlation between 07WA and MEDICAL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Mr Cooper Group and MEDICAL FACILITIES NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICAL FACILITIES NEW and Mr Cooper 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 Mr Cooper Group are associated (or correlated) with MEDICAL FACILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICAL FACILITIES NEW has no effect on the direction of Mr Cooper i.e., Mr Cooper and MEDICAL FACILITIES go up and down completely randomly.

Pair Corralation between Mr Cooper and MEDICAL FACILITIES

Assuming the 90 days trading horizon Mr Cooper Group is expected to generate 0.8 times more return on investment than MEDICAL FACILITIES. However, Mr Cooper Group is 1.25 times less risky than MEDICAL FACILITIES. It trades about 0.09 of its potential returns per unit of risk. MEDICAL FACILITIES NEW is currently generating about 0.07 per unit of risk. If you would invest  4,038  in Mr Cooper Group on October 7, 2024 and sell it today you would earn a total of  5,092  from holding Mr Cooper Group or generate 126.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mr Cooper Group  vs.  MEDICAL FACILITIES NEW

Mr Cooper Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mr Cooper Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mr Cooper reported solid returns over the last few months and may actually be approaching a breakup point.

MEDICAL FACILITIES NEW

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MEDICAL FACILITIES NEW are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MEDICAL FACILITIES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mr Cooper and MEDICAL FACILITIES

The main advantage of trading using opposite Mr Cooper and MEDICAL FACILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mr Cooper position performs unexpectedly, MEDICAL FACILITIES 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 MEDICAL FACILITIES will offset losses from the drop in MEDICAL FACILITIES's long position.

The idea behind Mr Cooper Group and MEDICAL FACILITIES NEW pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.