Correlation Between PennyMac Mortgage and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and FuelCell Energy 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 FuelCell Energy 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 FuelCell Energy, you can compare the effects of market volatilities on PennyMac Mortgage and FuelCell Energy 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and FuelCell Energy.
Diversification Opportunities for PennyMac Mortgage and FuelCell Energy
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PennyMac and FuelCell is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and FuelCell Energy go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and FuelCell Energy
Assuming the 90 days horizon PennyMac Mortgage Investment is expected to generate 0.18 times more return on investment than FuelCell Energy. However, PennyMac Mortgage Investment is 5.68 times less risky than FuelCell Energy. It trades about 0.05 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.03 per unit of risk. If you would invest 1,098 in PennyMac Mortgage Investment on November 5, 2024 and sell it today you would earn a total of 162.00 from holding PennyMac Mortgage Investment or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.57% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. FuelCell Energy
Performance |
| Timeline |
| PennyMac Mortgage |
| FuelCell Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
PennyMac Mortgage and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and FuelCell Energy
The main advantage of trading using opposite PennyMac Mortgage and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| PennyMac Mortgage vs. Guangdong Investment Limited | PennyMac Mortgage vs. ELMOS SEMICONDUCTOR | PennyMac Mortgage vs. Nordic Semiconductor ASA | PennyMac Mortgage vs. Lattice Semiconductor |
| FuelCell Energy vs. Delta Electronics Public | FuelCell Energy vs. YASKAWA ELEC UNSP | FuelCell Energy vs. Plug Power | FuelCell Energy vs. VERTIV HOLCL A |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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