Correlation Between PennyMac Mortgage and HUDSON TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and HUDSON TECHNOLOGY 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 HUDSON TECHNOLOGY 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 HUDSON TECHNOLOGY, you can compare the effects of market volatilities on PennyMac Mortgage and HUDSON TECHNOLOGY 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 HUDSON TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and HUDSON TECHNOLOGY.
Diversification Opportunities for PennyMac Mortgage and HUDSON TECHNOLOGY
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between PennyMac and HUDSON is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and HUDSON TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUDSON TECHNOLOGY 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 HUDSON TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUDSON TECHNOLOGY has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and HUDSON TECHNOLOGY go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and HUDSON TECHNOLOGY
Assuming the 90 days horizon PennyMac Mortgage Investment is expected to generate 0.17 times more return on investment than HUDSON TECHNOLOGY. However, PennyMac Mortgage Investment is 6.0 times less risky than HUDSON TECHNOLOGY. It trades about 0.29 of its potential returns per unit of risk. HUDSON TECHNOLOGY is currently generating about -0.13 per unit of risk. If you would invest 1,220 in PennyMac Mortgage Investment on September 5, 2024 and sell it today you would earn a total of 80.00 from holding PennyMac Mortgage Investment or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. HUDSON TECHNOLOGY
Performance |
| Timeline |
| PennyMac Mortgage |
| HUDSON TECHNOLOGY |
PennyMac Mortgage and HUDSON TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and HUDSON TECHNOLOGY
The main advantage of trading using opposite PennyMac Mortgage and HUDSON TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, HUDSON TECHNOLOGY 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 HUDSON TECHNOLOGY will offset losses from the drop in HUDSON TECHNOLOGY'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 |
| HUDSON TECHNOLOGY vs. Perseus Mining Limited | HUDSON TECHNOLOGY vs. Sims Metal Management | HUDSON TECHNOLOGY vs. Major Drilling Group | HUDSON TECHNOLOGY vs. Lion One Metals |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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