Correlation Between PennyMac Mortgage and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and AIR PRODCHEMICALS 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 PennyMac Mortgage and AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennyMac Mortgage Investment and AIR PRODCHEMICALS, you can compare the effects of market volatilities on PennyMac Mortgage and AIR PRODCHEMICALS 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 PennyMac Mortgage with a short position of AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and AIR PRODCHEMICALS.
Diversification Opportunities for PennyMac Mortgage and AIR PRODCHEMICALS
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennyMac and AIR is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and PennyMac Mortgage 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 PennyMac Mortgage Investment are associated (or correlated) with AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and AIR PRODCHEMICALS
Assuming the 90 days horizon PennyMac Mortgage is expected to generate 9.24 times less return on investment than AIR PRODCHEMICALS. In addition to that, PennyMac Mortgage is 1.01 times more volatile than AIR PRODCHEMICALS. It trades about 0.04 of its total potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.41 per unit of volatility. If you would invest 28,139 in AIR PRODCHEMICALS on October 25, 2024 and sell it today you would earn a total of 2,561 from holding AIR PRODCHEMICALS or generate 9.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| PennyMac Mortgage |
| AIR PRODCHEMICALS |
PennyMac Mortgage and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and AIR PRODCHEMICALS
The main advantage of trading using opposite PennyMac Mortgage and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| PennyMac Mortgage vs. PICKN PAY STORES | PennyMac Mortgage vs. AEON STORES | PennyMac Mortgage vs. Infrastrutture Wireless Italiane | PennyMac Mortgage vs. EIDESVIK OFFSHORE NK |
| AIR PRODCHEMICALS vs. Virtus Investment Partners | AIR PRODCHEMICALS vs. HK Electric Investments | AIR PRODCHEMICALS vs. PennyMac Mortgage Investment | AIR PRODCHEMICALS vs. CDL INVESTMENT |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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