Correlation Between PennyMac Mortgage and Eisai Co
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and Eisai Co 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 Eisai Co 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 Eisai Co, you can compare the effects of market volatilities on PennyMac Mortgage and Eisai Co 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 Eisai Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and Eisai Co.
Diversification Opportunities for PennyMac Mortgage and Eisai Co
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PennyMac and Eisai is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai Co 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 Eisai Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai Co has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Eisai Co go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and Eisai Co
Assuming the 90 days horizon PennyMac Mortgage Investment is expected to generate 0.52 times more return on investment than Eisai Co. However, PennyMac Mortgage Investment is 1.93 times less risky than Eisai Co. It trades about 0.03 of its potential returns per unit of risk. Eisai Co is currently generating about -0.06 per unit of risk. If you would invest 1,172 in PennyMac Mortgage Investment on September 4, 2024 and sell it today you would earn a total of 108.00 from holding PennyMac Mortgage Investment or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. Eisai Co
Performance |
| Timeline |
| PennyMac Mortgage |
| Eisai Co |
PennyMac Mortgage and Eisai Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and Eisai Co
The main advantage of trading using opposite PennyMac Mortgage and Eisai Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, Eisai Co 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 Eisai Co will offset losses from the drop in Eisai Co'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 |
| Eisai Co vs. PennyMac Mortgage Investment | Eisai Co vs. ECHO INVESTMENT ZY | Eisai Co vs. XLMedia PLC | Eisai Co vs. EAT WELL 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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