Correlation Between APPLIED MATERIALS and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS 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 APPLIED MATERIALS and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and PennyMac Mortgage Investment, you can compare the effects of market volatilities on APPLIED MATERIALS 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 APPLIED MATERIALS with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and PennyMac Mortgage.
Diversification Opportunities for APPLIED MATERIALS and PennyMac Mortgage
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between APPLIED and PennyMac is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS i.e., APPLIED MATERIALS and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and PennyMac Mortgage
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the PennyMac Mortgage. In addition to that, APPLIED MATERIALS is 2.83 times more volatile than PennyMac Mortgage Investment. It trades about -0.03 of its total potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about 0.07 per unit of volatility. If you would invest 1,175 in PennyMac Mortgage Investment on August 31, 2024 and sell it today you would earn a total of 105.00 from holding PennyMac Mortgage Investment or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
APPLIED MATERIALS vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| APPLIED MATERIALS |
| PennyMac Mortgage |
APPLIED MATERIALS and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and PennyMac Mortgage
The main advantage of trading using opposite APPLIED MATERIALS and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS 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.| APPLIED MATERIALS vs. Goodyear Tire Rubber | APPLIED MATERIALS vs. Entravision Communications | APPLIED MATERIALS vs. SBA Communications Corp | APPLIED MATERIALS vs. Ribbon Communications |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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