Correlation Between Equinix and PennyMac Mortgage

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Equinix 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 Equinix and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and PennyMac Mortgage Investment, you can compare the effects of market volatilities on Equinix 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 Equinix with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and PennyMac Mortgage.

Diversification Opportunities for Equinix and PennyMac Mortgage

EquinixPennyMacDiversified AwayEquinixPennyMacDiversified Away100%
-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Equinix and PennyMac is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and Equinix 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 Equinix 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 Equinix i.e., Equinix and PennyMac Mortgage go up and down completely randomly.

Pair Corralation between Equinix and PennyMac Mortgage

Assuming the 90 days trading horizon Equinix is expected to under-perform the PennyMac Mortgage. In addition to that, Equinix is 1.41 times more volatile than PennyMac Mortgage Investment. It trades about -0.26 of its total potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about 0.09 per unit of volatility. If you would invest  1,300  in PennyMac Mortgage Investment on December 9, 2024 and sell it today you would earn a total of  30.00  from holding PennyMac Mortgage Investment or generate 2.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Equinix  vs.  PennyMac Mortgage Investment

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15EQN2 8PM
       Timeline  
Equinix 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Equinix has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar800820840860880900920940
PennyMac Mortgage 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in PennyMac Mortgage Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PennyMac Mortgage may actually be approaching a critical reversion point that can send shares even higher in April 2025.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar1212.51313.5

Equinix and PennyMac Mortgage Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.25-2.44-1.62-0.80.00.741.52.273.033.8 0.050.100.150.20
JavaScript chart by amCharts 3.21.15EQN2 8PM
       Returns  

Pair Trading with Equinix and PennyMac Mortgage

The main advantage of trading using opposite Equinix and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix 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.
The idea behind Equinix and PennyMac Mortgage Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

Other Complementary Tools

Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon