Correlation Between GEELY AUTOMOBILE and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE 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 GEELY AUTOMOBILE and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and PennyMac Mortgage Investment, you can compare the effects of market volatilities on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and PennyMac Mortgage.
Diversification Opportunities for GEELY AUTOMOBILE and PennyMac Mortgage
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between GEELY and PennyMac is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and PennyMac Mortgage
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.92 times more return on investment than PennyMac Mortgage. However, GEELY AUTOMOBILE is 1.92 times more volatile than PennyMac Mortgage Investment. It trades about 0.11 of its potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about 0.03 per unit of risk. If you would invest 163.00 in GEELY AUTOMOBILE on October 22, 2024 and sell it today you would earn a total of 15.00 from holding GEELY AUTOMOBILE or generate 9.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.44% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| PennyMac Mortgage |
GEELY AUTOMOBILE and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and PennyMac Mortgage
The main advantage of trading using opposite GEELY AUTOMOBILE and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE 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.| GEELY AUTOMOBILE vs. Apollo Investment Corp | GEELY AUTOMOBILE vs. STORE ELECTRONIC | GEELY AUTOMOBILE vs. Meiko Electronics Co | GEELY AUTOMOBILE vs. ELECTRONIC ARTS |
| PennyMac Mortgage vs. PSI Software AG | PennyMac Mortgage vs. Alfa Financial Software | PennyMac Mortgage vs. Summit Hotel Properties | PennyMac Mortgage vs. Sunstone Hotel Investors |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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