Correlation Between Kearny Financial and PennyMac Finl
Can any of the company-specific risk be diversified away by investing in both Kearny Financial and PennyMac Finl 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 Kearny Financial and PennyMac Finl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kearny Financial Corp and PennyMac Finl Svcs, you can compare the effects of market volatilities on Kearny Financial and PennyMac Finl 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 Kearny Financial with a short position of PennyMac Finl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kearny Financial and PennyMac Finl.
Diversification Opportunities for Kearny Financial and PennyMac Finl
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kearny and PennyMac is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Kearny Financial Corp and PennyMac Finl Svcs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Finl Svcs and Kearny Financial 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 Kearny Financial Corp are associated (or correlated) with PennyMac Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Finl Svcs has no effect on the direction of Kearny Financial i.e., Kearny Financial and PennyMac Finl go up and down completely randomly.
Pair Corralation between Kearny Financial and PennyMac Finl
Given the investment horizon of 90 days Kearny Financial Corp is expected to generate 2.0 times more return on investment than PennyMac Finl. However, Kearny Financial is 2.0 times more volatile than PennyMac Finl Svcs. It trades about 0.11 of its potential returns per unit of risk. PennyMac Finl Svcs is currently generating about 0.02 per unit of risk. If you would invest 653.00 in Kearny Financial Corp on August 31, 2024 and sell it today you would earn a total of 140.00 from holding Kearny Financial Corp or generate 21.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kearny Financial Corp vs. PennyMac Finl Svcs
Performance |
| Timeline |
| Kearny Financial Corp |
| PennyMac Finl Svcs |
Kearny Financial and PennyMac Finl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kearny Financial and PennyMac Finl
The main advantage of trading using opposite Kearny Financial and PennyMac Finl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kearny Financial position performs unexpectedly, PennyMac Finl 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 Finl will offset losses from the drop in PennyMac Finl's long position.| Kearny Financial vs. National Bank Holdings | Kearny Financial vs. Community West Bancshares | Kearny Financial vs. Financial Institutions | Kearny Financial vs. Heritage Financial |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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