Correlation Between PennyMac Mortgage and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and Consolidated Communications 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 Consolidated Communications 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 Consolidated Communications Holdings, you can compare the effects of market volatilities on PennyMac Mortgage and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and Consolidated Communications.
Diversification Opportunities for PennyMac Mortgage and Consolidated Communications
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennyMac and Consolidated is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Consolidated Communications go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and Consolidated Communications
Assuming the 90 days horizon PennyMac Mortgage is expected to generate 2.48 times less return on investment than Consolidated Communications. In addition to that, PennyMac Mortgage is 1.11 times more volatile than Consolidated Communications Holdings. It trades about 0.07 of its total potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.19 per unit of volatility. If you would invest 424.00 in Consolidated Communications Holdings on August 31, 2024 and sell it today you would earn a total of 18.00 from holding Consolidated Communications Holdings or generate 4.25% 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. Consolidated Communications Ho
Performance |
| Timeline |
| PennyMac Mortgage |
| Consolidated Communications |
PennyMac Mortgage and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and Consolidated Communications
The main advantage of trading using opposite PennyMac Mortgage and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| PennyMac Mortgage vs. Superior Plus Corp | PennyMac Mortgage vs. NMI Holdings | PennyMac Mortgage vs. Origin Agritech | PennyMac Mortgage vs. SIVERS SEMICONDUCTORS AB |
| Consolidated Communications vs. T Mobile | Consolidated Communications vs. ATT Inc | Consolidated Communications vs. Deutsche Telekom AG | Consolidated Communications vs. Superior Plus 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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