Correlation Between PennyMac Mortgage and Atea ASA
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and Atea ASA 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 Atea ASA 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 Atea ASA, you can compare the effects of market volatilities on PennyMac Mortgage and Atea ASA 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 Atea ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and Atea ASA.
Diversification Opportunities for PennyMac Mortgage and Atea ASA
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PennyMac and Atea is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA 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 Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Atea ASA go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and Atea ASA
Assuming the 90 days horizon PennyMac Mortgage Investment is expected to generate 0.72 times more return on investment than Atea ASA. However, PennyMac Mortgage Investment is 1.4 times less risky than Atea ASA. It trades about 0.41 of its potential returns per unit of risk. Atea ASA is currently generating about 0.08 per unit of risk. If you would invest 1,180 in PennyMac Mortgage Investment on November 28, 2024 and sell it today you would earn a total of 150.00 from holding PennyMac Mortgage Investment or generate 12.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. Atea ASA
Performance |
| Timeline |
| PennyMac Mortgage |
| Atea ASA |
PennyMac Mortgage and Atea ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and Atea ASA
The main advantage of trading using opposite PennyMac Mortgage and Atea ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, Atea ASA 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 Atea ASA will offset losses from the drop in Atea ASA's long position.| PennyMac Mortgage vs. INDO RAMA SYNTHETIC | PennyMac Mortgage vs. IRONVELD PLC LS | PennyMac Mortgage vs. Daido Steel Co | PennyMac Mortgage vs. KINGBOARD CHEMICAL |
| Atea ASA vs. Gladstone Investment | Atea ASA vs. GUILD ESPORTS PLC | Atea ASA vs. NAKED WINES PLC | Atea ASA vs. UNIVERSAL DISPLAY |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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