Correlation Between ASHFORD HOSPITTRUST and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both ASHFORD HOSPITTRUST and PennyMac Mortgage 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 ASHFORD HOSPITTRUST and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASHFORD HOSPITTRUST and PennyMac Mortgage Investment, you can compare the effects of market volatilities on ASHFORD HOSPITTRUST and PennyMac Mortgage 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 ASHFORD HOSPITTRUST with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASHFORD HOSPITTRUST and PennyMac Mortgage.
Diversification Opportunities for ASHFORD HOSPITTRUST and PennyMac Mortgage
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ASHFORD and PennyMac is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding ASHFORD HOSPITTRUST and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and ASHFORD HOSPITTRUST 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 ASHFORD HOSPITTRUST are associated (or correlated) with PennyMac Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Mortgage has no effect on the direction of ASHFORD HOSPITTRUST i.e., ASHFORD HOSPITTRUST and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between ASHFORD HOSPITTRUST and PennyMac Mortgage
Assuming the 90 days horizon ASHFORD HOSPITTRUST is expected to generate 0.92 times more return on investment than PennyMac Mortgage. However, ASHFORD HOSPITTRUST is 1.09 times less risky than PennyMac Mortgage. It trades about 0.21 of its potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about 0.01 per unit of risk. If you would invest 482.00 in ASHFORD HOSPITTRUST on August 25, 2024 and sell it today you would earn a total of 23.00 from holding ASHFORD HOSPITTRUST or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ASHFORD HOSPITTRUST vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| ASHFORD HOSPITTRUST |
| PennyMac Mortgage |
ASHFORD HOSPITTRUST and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASHFORD HOSPITTRUST and PennyMac Mortgage
The main advantage of trading using opposite ASHFORD HOSPITTRUST and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASHFORD HOSPITTRUST position performs unexpectedly, PennyMac Mortgage 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 PennyMac Mortgage will offset losses from the drop in PennyMac Mortgage's long position.| ASHFORD HOSPITTRUST vs. Fair Isaac Corp | ASHFORD HOSPITTRUST vs. Corsair Gaming | ASHFORD HOSPITTRUST vs. ETFS Coffee ETC | ASHFORD HOSPITTRUST vs. Altair Engineering |
| PennyMac Mortgage vs. Superior Plus Corp | PennyMac Mortgage vs. NMI Holdings | PennyMac Mortgage vs. Origin Agritech | PennyMac Mortgage vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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