Correlation Between Gladstone Investment and Mr Cooper

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

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

Diversification Opportunities for Gladstone Investment and Mr Cooper

0.49

Correlation Coefficient

Gladstone Investment  Mr Cooper

Very weak diversification

The 3 months correlation between Gladstone and 07WA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and Mr Cooper go up and down completely randomly.

Pair Corralation between Gladstone Investment and Mr Cooper

Assuming the 90 days horizon Gladstone Investment is expected to generate 1.19 times less return on investment than Mr Cooper. But when comparing it to its historical volatility, Gladstone Investment is 1.15 times less risky than Mr Cooper. It trades about 0.05 of its potential returns per unit of risk. Mr Cooper Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,850  in Mr Cooper Group on October 7, 2024 and sell it today you would earn a total of  280.00  from holding Mr Cooper Group or generate 3.16% return on investment over 90 days.

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

Gladstone Investment  vs.  Mr Cooper Group

Gladstone Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Gladstone Investment and Mr Cooper

The main advantage of trading using opposite Gladstone Investment and Mr Cooper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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.

The idea behind Gladstone Investment and Mr Cooper Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.