Correlation Between WD 40 and Mr Cooper

Can any of the company-specific risk be diversified away by investing in both WD 40 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 WD 40 and Mr Cooper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WD 40 CO and Mr Cooper Group, you can compare the effects of market volatilities on WD 40 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 WD 40 with a short position of Mr Cooper. Check out your portfolio center. Please also check ongoing floating volatility patterns of WD 40 and Mr Cooper.

Diversification Opportunities for WD 40 and Mr Cooper

0.77

Correlation Coefficient

WD 40  Mr Cooper

Poor diversification

The 3 months correlation between WD1 and 07WA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 CO 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 WD 40 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 WD 40 CO 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 WD 40 i.e., WD 40 and Mr Cooper go up and down completely randomly.

Pair Corralation between WD 40 and Mr Cooper

Assuming the 90 days trading horizon WD 40 is expected to generate 4.41 times less return on investment than Mr Cooper. But when comparing it to its historical volatility, WD 40 CO is 1.02 times less risky than Mr Cooper. It trades about 0.02 of its potential returns per unit of risk. Mr Cooper Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,936  in Mr Cooper Group on October 5, 2024 and sell it today you would earn a total of  3,464  from holding Mr Cooper Group or generate 58.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.63%
Values	Daily Returns

WD 40 CO  vs.  Mr Cooper Group

WD 40 CO

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WD 40 CO are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, WD 40 is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Mr Cooper Group

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Mr Cooper Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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 WD 40 and Mr Cooper

The main advantage of trading using opposite WD 40 and Mr Cooper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WD 40 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 WD 40 CO 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..