Correlation Between Mr Cooper and Guild Holdings

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

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

Diversification Opportunities for Mr Cooper and Guild Holdings

-0.47

Correlation Coefficient

Mr Cooper  Guild Holdings

Very good diversification

The 3 months correlation between COOP and Guild is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Mr Cooper Group and Guild Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Holdings and Mr Cooper 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 Mr Cooper Group are associated (or correlated) with Guild Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Holdings has no effect on the direction of Mr Cooper i.e., Mr Cooper and Guild Holdings go up and down completely randomly.

Pair Corralation between Mr Cooper and Guild Holdings

Given the investment horizon of 90 days Mr Cooper Group is expected to generate 1.03 times more return on investment than Guild Holdings. However, Mr Cooper is 1.03 times more volatile than Guild Holdings Co. It trades about 0.21 of its potential returns per unit of risk. Guild Holdings Co is currently generating about -0.07 per unit of risk. If you would invest  9,052  in Mr Cooper Group on August 31, 2024 and sell it today you would earn a total of  781.00  from holding Mr Cooper Group or generate 8.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mr Cooper Group  vs.  Guild Holdings Co

Mr Cooper Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mr Cooper Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Mr Cooper may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Guild Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guild Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Mr Cooper and Guild Holdings

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

The idea behind Mr Cooper Group and Guild Holdings Co 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.