Correlation Between PennyMac Mortgage and Check Point
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and Check Point 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 Check Point 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 Check Point Software, you can compare the effects of market volatilities on PennyMac Mortgage and Check Point 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 Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and Check Point.
Diversification Opportunities for PennyMac Mortgage and Check Point
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennyMac and Check is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software 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 Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Check Point go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and Check Point
Assuming the 90 days horizon PennyMac Mortgage is expected to generate 3.58 times less return on investment than Check Point. But when comparing it to its historical volatility, PennyMac Mortgage Investment is 1.37 times less risky than Check Point. It trades about 0.07 of its potential returns per unit of risk. Check Point Software is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 16,205 in Check Point Software on August 31, 2024 and sell it today you would earn a total of 985.00 from holding Check Point Software or generate 6.08% 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. Check Point Software
Performance |
| Timeline |
| PennyMac Mortgage |
| Check Point Software |
PennyMac Mortgage and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and Check Point
The main advantage of trading using opposite PennyMac Mortgage and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.| PennyMac Mortgage vs. Superior Plus Corp | PennyMac Mortgage vs. NMI Holdings | PennyMac Mortgage vs. Origin Agritech | PennyMac Mortgage vs. SIVERS SEMICONDUCTORS AB |
| Check Point vs. CVW CLEANTECH INC | Check Point vs. NorAm Drilling AS | Check Point vs. BORR DRILLING NEW | Check Point vs. Clean Energy Fuels |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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