Correlation Between INTERCONT HOTELS and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS 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 INTERCONT HOTELS and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTERCONT HOTELS and PennyMac Mortgage Investment, you can compare the effects of market volatilities on INTERCONT HOTELS 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 INTERCONT HOTELS with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and PennyMac Mortgage.
Diversification Opportunities for INTERCONT HOTELS and PennyMac Mortgage
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between INTERCONT and PennyMac is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and INTERCONT HOTELS 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 INTERCONT HOTELS 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 INTERCONT HOTELS i.e., INTERCONT HOTELS and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between INTERCONT HOTELS and PennyMac Mortgage
Assuming the 90 days trading horizon INTERCONT HOTELS is expected to generate 0.87 times more return on investment than PennyMac Mortgage. However, INTERCONT HOTELS is 1.15 times less risky than PennyMac Mortgage. It trades about 0.28 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 11,900 in INTERCONT HOTELS on October 27, 2024 and sell it today you would earn a total of 700.00 from holding INTERCONT HOTELS or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTERCONT HOTELS vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| INTERCONT HOTELS |
| PennyMac Mortgage |
INTERCONT HOTELS and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTERCONT HOTELS and PennyMac Mortgage
The main advantage of trading using opposite INTERCONT HOTELS and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS 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.| INTERCONT HOTELS vs. Packaging of | INTERCONT HOTELS vs. ERSTE GP BNK | INTERCONT HOTELS vs. W R Berkley | INTERCONT HOTELS vs. News Corporation |
| PennyMac Mortgage vs. China BlueChemical | PennyMac Mortgage vs. Luckin Coffee | PennyMac Mortgage vs. Sanyo Chemical Industries | PennyMac Mortgage vs. Silicon Motion Technology |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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