Correlation Between Security National and Ocwen Financial

Can any of the company-specific risk be diversified away by investing in both Security National and Ocwen 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 Security National and Ocwen Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Security National Financial and Ocwen Financial, you can compare the effects of market volatilities on Security National and Ocwen 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 Security National with a short position of Ocwen Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security National and Ocwen Financial.

Diversification Opportunities for Security National and Ocwen Financial

0.74

Correlation Coefficient

Security National  Ocwen Financial

Poor diversification

The 3 months correlation between Security and Ocwen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Security National Financial and Ocwen Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocwen Financial and Security National 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 Security National Financial are associated (or correlated) with Ocwen Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocwen Financial has no effect on the direction of Security National i.e., Security National and Ocwen Financial go up and down completely randomly.

Pair Corralation between Security National and Ocwen Financial

If you would invest  855.00  in Security National Financial on September 2, 2024 and sell it today you would earn a total of  453.00  from holding Security National Financial or generate 52.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Security National Financial  vs.  Ocwen Financial

Security National

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Security National Financial are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Security National sustained solid returns over the last few months and may actually be approaching a breakup point.

Ocwen Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocwen Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Ocwen Financial is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Security National and Ocwen Financial

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

The idea behind Security National Financial and Ocwen Financial 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.