Correlation Between Transport International and Mr Cooper

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

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

Diversification Opportunities for Transport International and Mr Cooper

-0.29

Correlation Coefficient

Transport International  Mr Cooper

Very good diversification

The 3 months correlation between Transport and 07WA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin 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 Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and Mr Cooper go up and down completely randomly.

Pair Corralation between Transport International and Mr Cooper

Assuming the 90 days horizon Transport International is expected to generate 3.5 times less return on investment than Mr Cooper. In addition to that, Transport International is 1.0 times more volatile than Mr Cooper Group. It trades about 0.04 of its total potential returns per unit of risk. Mr Cooper Group is currently generating about 0.13 per unit of volatility. If you would invest  8,296  in Mr Cooper Group on October 6, 2024 and sell it today you would earn a total of  834.00  from holding Mr Cooper Group or generate 10.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Transport International Holdin  vs.  Mr Cooper Group

Transport International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transport International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Transport International is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Transport International and Mr Cooper

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

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.