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
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ECN and UWM is -0.74. 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 generate 1.4 times more return on investment than UWM Holdings. However, ECN Capital is 1.4 times more volatile than UWM Holdings Corp. It trades about 0.11 of its potential returns per unit of risk. UWM Holdings Corp is currently generating about -0.01 per unit of risk. If you would invest 129.00 in ECN Capital Corp on September 20, 2024 and sell it today you would earn a total of 91.00 from holding ECN Capital Corp or generate 70.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 94.61% |
Values | Daily Returns |
ECN Capital Corp vs. UWM Holdings Corp
Performance |
Timeline |
ECN Capital Corp |
UWM Holdings Corp |
ECN Capital and UWM Holdings Volatility Contrast
Predicted Return Density |
Returns |
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.ECN Capital vs. PennyMac Finl Svcs | ECN Capital vs. Velocity Financial Llc | ECN Capital vs. Encore Capital Group | ECN Capital vs. Greystone Housing Impact |
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Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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