Correlation Between INTER CARS and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both INTER CARS 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 INTER CARS and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and PennyMac Mortgage Investment, you can compare the effects of market volatilities on INTER CARS 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 INTER CARS with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and PennyMac Mortgage.
Diversification Opportunities for INTER CARS and PennyMac Mortgage
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INTER and PennyMac is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and INTER CARS 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 INTER CARS SA 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 INTER CARS i.e., INTER CARS and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between INTER CARS and PennyMac Mortgage
Assuming the 90 days horizon INTER CARS SA is expected to generate 1.35 times more return on investment than PennyMac Mortgage. However, INTER CARS is 1.35 times more volatile than PennyMac Mortgage Investment. It trades about 0.03 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 9,228 in INTER CARS SA on October 7, 2024 and sell it today you would earn a total of 2,632 from holding INTER CARS SA or generate 28.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| INTER CARS SA |
| PennyMac Mortgage |
INTER CARS and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and PennyMac Mortgage
The main advantage of trading using opposite INTER CARS and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS 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.| INTER CARS vs. PT Astra International | INTER CARS vs. Superior Plus Corp | INTER CARS vs. NMI Holdings | INTER CARS vs. SIVERS SEMICONDUCTORS AB |
| PennyMac Mortgage vs. W P Carey | PennyMac Mortgage vs. Gaming and Leisure | PennyMac Mortgage vs. Superior Plus Corp | PennyMac Mortgage vs. NMI Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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