Correlation Between ECN Capital and UWM Holdings

Can any of the company-specific risk be diversified away by investing in both ECN Capital and UWM Holdings 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 ECN Capital and UWM Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ECN Capital Corp and UWM Holdings Corp, you can compare the effects of market volatilities on ECN Capital and UWM Holdings 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 ECN Capital with a short position of UWM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECN Capital and UWM Holdings.

Diversification Opportunities for ECN Capital and UWM Holdings

0.11

Correlation Coefficient

ECN Capital  UWM Holdings

Average diversification

The 3 months correlation between ECN and UWM is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ECN Capital Corp and UWM Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UWM Holdings Corp and ECN Capital 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 ECN Capital Corp are associated (or correlated) with UWM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UWM Holdings Corp has no effect on the direction of ECN Capital i.e., ECN Capital and UWM Holdings go up and down completely randomly.

Pair Corralation between ECN Capital and UWM Holdings

Assuming the 90 days horizon ECN Capital Corp is expected to under-perform the UWM Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, ECN Capital Corp is 1.09 times less risky than UWM Holdings. The pink sheet trades about -0.07 of its potential returns per unit of risk. The UWM Holdings Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  546.00  in UWM Holdings Corp on December 11, 2024 and sell it today you would earn a total of  54.00  from holding UWM Holdings Corp or generate 9.89% return on investment over 90 days.

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

ECN Capital Corp  vs.  UWM Holdings Corp

ECN Capital Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ECN Capital Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, ECN Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

UWM Holdings Corp

Risk-Adjusted Performance

Insignificant

Over the last 90 days UWM Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, UWM Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ECN Capital and UWM Holdings

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

The idea behind ECN Capital Corp and UWM Holdings Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.