Correlation Between PennyMac Mortgage and Waste Management
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on PennyMac Mortgage and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and Waste Management.
Diversification Opportunities for PennyMac Mortgage and Waste Management
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PennyMac and Waste is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Waste Management go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and Waste Management
Assuming the 90 days horizon PennyMac Mortgage Investment is expected to under-perform the Waste Management. In addition to that, PennyMac Mortgage is 1.06 times more volatile than Waste Management. It trades about -0.11 of its total potential returns per unit of risk. Waste Management is currently generating about -0.07 per unit of volatility. If you would invest 20,470 in Waste Management on October 13, 2024 and sell it today you would lose (305.00) from holding Waste Management or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. Waste Management
Performance |
| Timeline |
| PennyMac Mortgage |
| Waste Management |
PennyMac Mortgage and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and Waste Management
The main advantage of trading using opposite PennyMac Mortgage and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| PennyMac Mortgage vs. ALGOMA STEEL GROUP | PennyMac Mortgage vs. Broadcom | PennyMac Mortgage vs. QUEEN S ROAD | PennyMac Mortgage vs. Xiwang Special Steel |
| Waste Management vs. Altair Engineering | Waste Management vs. FAIR ISAAC | Waste Management vs. WIZZ AIR HLDGUNSPADR4 | Waste Management vs. SEALED AIR |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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