Correlation Between PennyMac Mortgage and Marriott International
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and Marriott International 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 Marriott International 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 Marriott International, you can compare the effects of market volatilities on PennyMac Mortgage and Marriott International 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 Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and Marriott International.
Diversification Opportunities for PennyMac Mortgage and Marriott International
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennyMac and Marriott is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International 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 Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Marriott International go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and Marriott International
Assuming the 90 days horizon PennyMac Mortgage Investment is expected to generate 0.59 times more return on investment than Marriott International. However, PennyMac Mortgage Investment is 1.68 times less risky than Marriott International. It trades about 0.4 of its potential returns per unit of risk. Marriott International is currently generating about 0.0 per unit of risk. If you would invest 1,180 in PennyMac Mortgage Investment on November 27, 2024 and sell it today you would earn a total of 140.00 from holding PennyMac Mortgage Investment or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. Marriott International
Performance |
| Timeline |
| PennyMac Mortgage |
| Marriott International |
PennyMac Mortgage and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and Marriott International
The main advantage of trading using opposite PennyMac Mortgage and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, Marriott International 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 Marriott International will offset losses from the drop in Marriott International's long position.| PennyMac Mortgage vs. Luckin Coffee | PennyMac Mortgage vs. Burlington Stores | PennyMac Mortgage vs. Ross Stores | PennyMac Mortgage vs. SOEDER SPORTFISKE AB |
| Marriott International vs. GRUPO CARSO A1 | Marriott International vs. Japan Asia Investment | Marriott International vs. SALESFORCE INC CDR | Marriott International vs. GungHo Online Entertainment |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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