Correlation Between PennyMac Mortgage and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and Flutter Entertainment 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 Flutter Entertainment 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 Flutter Entertainment PLC, you can compare the effects of market volatilities on PennyMac Mortgage and Flutter Entertainment 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 Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and Flutter Entertainment.
Diversification Opportunities for PennyMac Mortgage and Flutter Entertainment
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennyMac and Flutter is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and Flutter Entertainment PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment PLC 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 Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment PLC has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Flutter Entertainment go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and Flutter Entertainment
Assuming the 90 days horizon PennyMac Mortgage is expected to generate 13.78 times less return on investment than Flutter Entertainment. But when comparing it to its historical volatility, PennyMac Mortgage Investment is 2.24 times less risky than Flutter Entertainment. It trades about 0.04 of its potential returns per unit of risk. Flutter Entertainment PLC is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 23,350 in Flutter Entertainment PLC on September 13, 2024 and sell it today you would earn a total of 2,930 from holding Flutter Entertainment PLC or generate 12.55% 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. Flutter Entertainment PLC
Performance |
| Timeline |
| PennyMac Mortgage |
| Flutter Entertainment PLC |
PennyMac Mortgage and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and Flutter Entertainment
The main advantage of trading using opposite PennyMac Mortgage and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, Flutter Entertainment 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 Flutter Entertainment will offset losses from the drop in Flutter Entertainment's long position.| PennyMac Mortgage vs. Selective Insurance Group | PennyMac Mortgage vs. Direct Line Insurance | PennyMac Mortgage vs. ZURICH INSURANCE GROUP | PennyMac Mortgage vs. Hyster Yale Materials Handling |
| Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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