Correlation Between Iridium Communications and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and PennyMac Mortgage Investment, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and PennyMac Mortgage.
Diversification Opportunities for Iridium Communications and PennyMac Mortgage
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Iridium and PennyMac is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between Iridium Communications and PennyMac Mortgage
Assuming the 90 days horizon Iridium Communications is expected to generate 1.77 times more return on investment than PennyMac Mortgage. However, Iridium Communications is 1.77 times more volatile than PennyMac Mortgage Investment. It trades about 0.0 of its potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about -0.11 per unit of risk. If you would invest 2,772 in Iridium Communications on September 30, 2024 and sell it today you would lose (6.00) from holding Iridium Communications or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| Iridium Communications |
| PennyMac Mortgage |
Iridium Communications and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and PennyMac Mortgage
The main advantage of trading using opposite Iridium Communications and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.| Iridium Communications vs. T Mobile | Iridium Communications vs. ATT Inc | Iridium Communications vs. Deutsche Telekom AG | Iridium Communications vs. Deutsche Telekom AG |
| PennyMac Mortgage vs. TITANIUM TRANSPORTGROUP | PennyMac Mortgage vs. JD SPORTS FASH | PennyMac Mortgage vs. Strategic Investments AS | PennyMac Mortgage vs. Apollo Investment Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Transaction History View history of all your transactions and understand their impact on performance |