Correlation Between PennyMac Mortgage and China Mobile
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and China Mobile 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 China Mobile 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 China Mobile Limited, you can compare the effects of market volatilities on PennyMac Mortgage and China Mobile 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 China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and China Mobile.
Diversification Opportunities for PennyMac Mortgage and China Mobile
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PennyMac and China is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and China Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile Limited 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 China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile Limited has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and China Mobile go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and China Mobile
If you would invest 1,220 in PennyMac Mortgage Investment on September 3, 2024 and sell it today you would earn a total of 60.00 from holding PennyMac Mortgage Investment or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. China Mobile Limited
Performance |
| Timeline |
| PennyMac Mortgage |
| China Mobile Limited |
PennyMac Mortgage and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and China Mobile
The main advantage of trading using opposite PennyMac Mortgage and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, China Mobile 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 China Mobile will offset losses from the drop in China Mobile'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 |
| China Mobile vs. NISSAN CHEMICAL IND | China Mobile vs. Hyatt Hotels | China Mobile vs. Westlake Chemical | China Mobile vs. MELIA HOTELS |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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