Correlation Between PennyMac Mortgage and TELE2 B
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and TELE2 B 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 TELE2 B 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 TELE2 B , you can compare the effects of market volatilities on PennyMac Mortgage and TELE2 B 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 TELE2 B. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and TELE2 B.
Diversification Opportunities for PennyMac Mortgage and TELE2 B
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennyMac and TELE2 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and TELE2 B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELE2 B 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 TELE2 B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELE2 B has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and TELE2 B go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and TELE2 B
Assuming the 90 days horizon PennyMac Mortgage is expected to generate 9.7 times less return on investment than TELE2 B. But when comparing it to its historical volatility, PennyMac Mortgage Investment is 3.54 times less risky than TELE2 B. It trades about 0.03 of its potential returns per unit of risk. TELE2 B is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 109.00 in TELE2 B on September 26, 2024 and sell it today you would earn a total of 840.00 from holding TELE2 B or generate 770.64% 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. TELE2 B
Performance |
| Timeline |
| PennyMac Mortgage |
| TELE2 B |
PennyMac Mortgage and TELE2 B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and TELE2 B
The main advantage of trading using opposite PennyMac Mortgage and TELE2 B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, TELE2 B 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 TELE2 B will offset losses from the drop in TELE2 B's long position.| PennyMac Mortgage vs. Crown Castle International | PennyMac Mortgage vs. Equinix | PennyMac Mortgage vs. W P Carey | PennyMac Mortgage vs. Gaming and Leisure |
| TELE2 B vs. PennyMac Mortgage Investment | TELE2 B vs. TERADATA | TELE2 B vs. Gladstone Investment | TELE2 B vs. Datadog |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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