Correlation Between Mr Cooper and Velocity Financial

Can any of the company-specific risk be diversified away by investing in both Mr Cooper 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 Mr Cooper and Velocity Financial 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 Velocity Financial Llc, you can compare the effects of market volatilities on Mr Cooper 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 Mr Cooper with a short position of Velocity Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mr Cooper and Velocity Financial.

Diversification Opportunities for Mr Cooper and Velocity Financial

-0.58

Correlation Coefficient

Mr Cooper  Velocity Financial

Excellent diversification

The 3 months correlation between COOP and Velocity is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mr Cooper Group 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 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 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 Mr Cooper i.e., Mr Cooper and Velocity Financial go up and down completely randomly.

Pair Corralation between Mr Cooper and Velocity Financial

Given the investment horizon of 90 days Mr Cooper Group is expected to generate 1.74 times more return on investment than Velocity Financial. However, Mr Cooper is 1.74 times more volatile than Velocity Financial Llc. It trades about 0.09 of its potential returns per unit of risk. Velocity Financial Llc is currently generating about 0.03 per unit of risk. If you would invest  9,073  in Mr Cooper Group on November 19, 2024 and sell it today you would earn a total of  1,713  from holding Mr Cooper Group or generate 18.88% return on investment over 90 days.

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

Mr Cooper Group  vs.  Velocity Financial Llc

Mr Cooper Group

Risk-Adjusted Performance

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. Even with relatively unsteady basic indicators, Mr Cooper may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Velocity Financial Llc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Velocity Financial Llc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Mr Cooper and Velocity Financial

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

The idea behind Mr Cooper Group and Velocity Financial Llc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.