Correlation Between WFD Unibail and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both WFD Unibail and PennyMac Mortgage 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 WFD Unibail and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WFD Unibail Rodamco and PennyMac Mortgage Investment, you can compare the effects of market volatilities on WFD Unibail and PennyMac Mortgage 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 WFD Unibail with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of WFD Unibail and PennyMac Mortgage.
Diversification Opportunities for WFD Unibail and PennyMac Mortgage
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WFD and PennyMac is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding WFD Unibail Rodamco and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and WFD Unibail 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 WFD Unibail Rodamco are associated (or correlated) with PennyMac Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Mortgage has no effect on the direction of WFD Unibail i.e., WFD Unibail and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between WFD Unibail and PennyMac Mortgage
Assuming the 90 days trading horizon WFD Unibail Rodamco is expected to generate 1.15 times more return on investment than PennyMac Mortgage. However, WFD Unibail is 1.15 times more volatile than PennyMac Mortgage Investment. It trades about 0.05 of its potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about 0.03 per unit of risk. If you would invest 4,981 in WFD Unibail Rodamco on August 30, 2024 and sell it today you would earn a total of 2,677 from holding WFD Unibail Rodamco or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WFD Unibail Rodamco vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| WFD Unibail Rodamco |
| PennyMac Mortgage |
WFD Unibail and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WFD Unibail and PennyMac Mortgage
The main advantage of trading using opposite WFD Unibail and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WFD Unibail position performs unexpectedly, PennyMac Mortgage 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 PennyMac Mortgage will offset losses from the drop in PennyMac Mortgage's long position.| WFD Unibail vs. FISH PAYK HEALTH | WFD Unibail vs. Monster Beverage Corp | WFD Unibail vs. EHEALTH | WFD Unibail vs. FEMALE HEALTH |
| PennyMac Mortgage vs. Superior Plus Corp | PennyMac Mortgage vs. NMI Holdings | PennyMac Mortgage vs. SIVERS SEMICONDUCTORS AB | PennyMac Mortgage vs. Talanx AG |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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