Correlation Between PennyMac Mortgage and CNVISION MEDIA
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and CNVISION MEDIA 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 CNVISION MEDIA 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 CNVISION MEDIA, you can compare the effects of market volatilities on PennyMac Mortgage and CNVISION MEDIA 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 CNVISION MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and CNVISION MEDIA.
Diversification Opportunities for PennyMac Mortgage and CNVISION MEDIA
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PennyMac and CNVISION is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and CNVISION MEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNVISION MEDIA 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 CNVISION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNVISION MEDIA has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and CNVISION MEDIA go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and CNVISION MEDIA
Assuming the 90 days horizon PennyMac Mortgage is expected to generate 3.0 times less return on investment than CNVISION MEDIA. But when comparing it to its historical volatility, PennyMac Mortgage Investment is 2.88 times less risky than CNVISION MEDIA. It trades about 0.04 of its potential returns per unit of risk. CNVISION MEDIA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5.55 in CNVISION MEDIA on September 13, 2024 and sell it today you would earn a total of 0.10 from holding CNVISION MEDIA or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. CNVISION MEDIA
Performance |
| Timeline |
| PennyMac Mortgage |
| CNVISION MEDIA |
PennyMac Mortgage and CNVISION MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and CNVISION MEDIA
The main advantage of trading using opposite PennyMac Mortgage and CNVISION MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, CNVISION MEDIA 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 CNVISION MEDIA will offset losses from the drop in CNVISION MEDIA's long position.| PennyMac Mortgage vs. Selective Insurance Group | PennyMac Mortgage vs. Direct Line Insurance | PennyMac Mortgage vs. ZURICH INSURANCE GROUP | PennyMac Mortgage vs. Hyster Yale Materials Handling |
| CNVISION MEDIA vs. Apple Inc | CNVISION MEDIA vs. Apple Inc | CNVISION MEDIA vs. Apple Inc | CNVISION MEDIA vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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