Correlation Between PennyMac Mortgage and UMC Electronics
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and UMC Electronics 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 UMC Electronics 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 UMC Electronics Co, you can compare the effects of market volatilities on PennyMac Mortgage and UMC Electronics 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 UMC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and UMC Electronics.
Diversification Opportunities for PennyMac Mortgage and UMC Electronics
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PennyMac and UMC is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and UMC Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMC Electronics 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 UMC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMC Electronics has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and UMC Electronics go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and UMC Electronics
Assuming the 90 days horizon PennyMac Mortgage Investment is expected to generate 0.51 times more return on investment than UMC Electronics. However, PennyMac Mortgage Investment is 1.98 times less risky than UMC Electronics. It trades about 0.07 of its potential returns per unit of risk. UMC Electronics Co is currently generating about -0.15 per unit of risk. If you would invest 1,260 in PennyMac Mortgage Investment on August 27, 2024 and sell it today you would earn a total of 20.00 from holding PennyMac Mortgage Investment or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. UMC Electronics Co
Performance |
| Timeline |
| PennyMac Mortgage |
| UMC Electronics |
PennyMac Mortgage and UMC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and UMC Electronics
The main advantage of trading using opposite PennyMac Mortgage and UMC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, UMC Electronics 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 UMC Electronics will offset losses from the drop in UMC Electronics' long position.| PennyMac Mortgage vs. China Resources Beer | PennyMac Mortgage vs. Chunghwa Telecom Co | PennyMac Mortgage vs. SK TELECOM TDADR | PennyMac Mortgage vs. Molson Coors Beverage |
| UMC Electronics vs. Harmony Gold Mining | UMC Electronics vs. Calibre Mining Corp | UMC Electronics vs. MACOM Technology Solutions | UMC Electronics vs. Check Point Software |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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