Correlation Between PennyMac Mortgage and Universal Entertainment
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and Universal 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 Universal 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 Universal Entertainment, you can compare the effects of market volatilities on PennyMac Mortgage and Universal 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 Universal Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and Universal Entertainment.
Diversification Opportunities for PennyMac Mortgage and Universal Entertainment
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennyMac and Universal is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment 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 Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Universal Entertainment go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and Universal Entertainment
Assuming the 90 days horizon PennyMac Mortgage Investment is expected to generate 0.48 times more return on investment than Universal Entertainment. However, PennyMac Mortgage Investment is 2.1 times less risky than Universal Entertainment. It trades about 0.06 of its potential returns per unit of risk. Universal Entertainment is currently generating about -0.07 per unit of risk. If you would invest 1,138 in PennyMac Mortgage Investment on December 4, 2024 and sell it today you would earn a total of 232.00 from holding PennyMac Mortgage Investment or generate 20.39% 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. Universal Entertainment
Performance |
| Timeline |
| PennyMac Mortgage |
| Universal Entertainment |
PennyMac Mortgage and Universal Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and Universal Entertainment
The main advantage of trading using opposite PennyMac Mortgage and Universal Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, Universal 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 Universal Entertainment will offset losses from the drop in Universal Entertainment's long position.| PennyMac Mortgage vs. ACCSYS TECHPLC EO | PennyMac Mortgage vs. Applied Materials | PennyMac Mortgage vs. THRACE PLASTICS | PennyMac Mortgage vs. Playtech plc |
| Universal Entertainment vs. AUTO TRADER ADR | Universal Entertainment vs. HAVERTY FURNITURE A | Universal Entertainment vs. Focus Home Interactive | Universal Entertainment vs. GOME Retail Holdings |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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