Correlation Between PennyMac Mortgage and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and MAGIC SOFTWARE 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 MAGIC SOFTWARE 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 MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on PennyMac Mortgage and MAGIC SOFTWARE 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 MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and MAGIC SOFTWARE.
Diversification Opportunities for PennyMac Mortgage and MAGIC SOFTWARE
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennyMac and MAGIC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and MAGIC SOFTWARE ENTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGIC SOFTWARE ENTR 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 MAGIC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGIC SOFTWARE ENTR has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and MAGIC SOFTWARE
Assuming the 90 days horizon PennyMac Mortgage is expected to generate 6.12 times less return on investment than MAGIC SOFTWARE. But when comparing it to its historical volatility, PennyMac Mortgage Investment is 2.87 times less risky than MAGIC SOFTWARE. It trades about 0.07 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 950.00 in MAGIC SOFTWARE ENTR on September 2, 2024 and sell it today you would earn a total of 250.00 from holding MAGIC SOFTWARE ENTR or generate 26.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| PennyMac Mortgage |
| MAGIC SOFTWARE ENTR |
PennyMac Mortgage and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and MAGIC SOFTWARE
The main advantage of trading using opposite PennyMac Mortgage and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, MAGIC SOFTWARE 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 MAGIC SOFTWARE will offset losses from the drop in MAGIC SOFTWARE's long position.| PennyMac Mortgage vs. DXC Technology Co | PennyMac Mortgage vs. X FAB Silicon Foundries | PennyMac Mortgage vs. Hyrican Informationssysteme Aktiengesellschaft | PennyMac Mortgage vs. SCOTT TECHNOLOGY |
| MAGIC SOFTWARE vs. SIVERS SEMICONDUCTORS AB | MAGIC SOFTWARE vs. Darden Restaurants | MAGIC SOFTWARE vs. Reliance Steel Aluminum | MAGIC SOFTWARE vs. Q2M Managementberatung AG |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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