Correlation Between BRAEMAR HOTELS and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both BRAEMAR HOTELS 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 BRAEMAR HOTELS and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRAEMAR HOTELS RES and PennyMac Mortgage Investment, you can compare the effects of market volatilities on BRAEMAR HOTELS 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 BRAEMAR HOTELS with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRAEMAR HOTELS and PennyMac Mortgage.
Diversification Opportunities for BRAEMAR HOTELS and PennyMac Mortgage
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BRAEMAR and PennyMac is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BRAEMAR HOTELS RES and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and BRAEMAR HOTELS 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 BRAEMAR HOTELS RES 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 BRAEMAR HOTELS i.e., BRAEMAR HOTELS and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between BRAEMAR HOTELS and PennyMac Mortgage
Assuming the 90 days horizon BRAEMAR HOTELS RES is expected to under-perform the PennyMac Mortgage. In addition to that, BRAEMAR HOTELS is 3.21 times more volatile than PennyMac Mortgage Investment. It trades about -0.15 of its total potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about -0.15 per unit of volatility. If you would invest 1,228 in PennyMac Mortgage Investment on October 12, 2024 and sell it today you would lose (38.00) from holding PennyMac Mortgage Investment or give up 3.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRAEMAR HOTELS RES vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| BRAEMAR HOTELS RES |
| PennyMac Mortgage |
BRAEMAR HOTELS and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRAEMAR HOTELS and PennyMac Mortgage
The main advantage of trading using opposite BRAEMAR HOTELS and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRAEMAR HOTELS 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.| BRAEMAR HOTELS vs. Hua Hong Semiconductor | BRAEMAR HOTELS vs. DEVRY EDUCATION GRP | BRAEMAR HOTELS vs. TAL Education Group | BRAEMAR HOTELS vs. TOREX SEMICONDUCTOR LTD |
| PennyMac Mortgage vs. ALGOMA STEEL GROUP | PennyMac Mortgage vs. TOMBADOR IRON LTD | PennyMac Mortgage vs. STEEL DYNAMICS | PennyMac Mortgage vs. PLAYMATES TOYS |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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