Correlation Between Mr Cooper and Walker Dunlop

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

Diversification Opportunities for Mr Cooper and Walker Dunlop

0.19

Correlation Coefficient

Mr Cooper  Walker Dunlop

Average diversification

The 3 months correlation between COOP and Walker is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Mr Cooper Group and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop 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 Walker Dunlop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walker Dunlop has no effect on the direction of Mr Cooper i.e., Mr Cooper and Walker Dunlop go up and down completely randomly.

Pair Corralation between Mr Cooper and Walker Dunlop

Given the investment horizon of 90 days Mr Cooper Group is expected to generate 1.06 times more return on investment than Walker Dunlop. However, Mr Cooper is 1.06 times more volatile than Walker Dunlop. It trades about 0.05 of its potential returns per unit of risk. Walker Dunlop is currently generating about 0.05 per unit of risk. If you would invest  9,381  in Mr Cooper Group on August 30, 2024 and sell it today you would earn a total of  452.00  from holding Mr Cooper Group or generate 4.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Mr Cooper Group  vs.  Walker Dunlop

Mr Cooper Group

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mr Cooper Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Mr Cooper is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Walker Dunlop

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Walker Dunlop is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mr Cooper and Walker Dunlop

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

The idea behind Mr Cooper Group and Walker Dunlop 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.