Correlation Between PennyMac Finl and Federal National
Can any of the company-specific risk be diversified away by investing in both PennyMac Finl and Federal National 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 PennyMac Finl and Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennyMac Finl Svcs and Federal National Mortgage, you can compare the effects of market volatilities on PennyMac Finl and Federal National 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 PennyMac Finl with a short position of Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Finl and Federal National.
Diversification Opportunities for PennyMac Finl and Federal National
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PennyMac and Federal is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Finl Svcs and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage and PennyMac Finl 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 PennyMac Finl Svcs are associated (or correlated) with Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of PennyMac Finl i.e., PennyMac Finl and Federal National go up and down completely randomly.
Pair Corralation between PennyMac Finl and Federal National
Given the investment horizon of 90 days PennyMac Finl is expected to generate 6.06 times less return on investment than Federal National. But when comparing it to its historical volatility, PennyMac Finl Svcs is 3.61 times less risky than Federal National. It trades about 0.07 of its potential returns per unit of risk. Federal National Mortgage is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Federal National Mortgage on August 24, 2024 and sell it today you would earn a total of 166.00 from holding Federal National Mortgage or generate 110.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennyMac Finl Svcs vs. Federal National Mortgage
Performance |
| Timeline |
| PennyMac Finl Svcs |
| Federal National Mortgage |
PennyMac Finl and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Finl and Federal National
The main advantage of trading using opposite PennyMac Finl and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Finl position performs unexpectedly, Federal National 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 Federal National will offset losses from the drop in Federal National's long position.| PennyMac Finl vs. Encore Capital Group | PennyMac Finl vs. Greystone Housing Impact | PennyMac Finl vs. Guild Holdings Co | PennyMac Finl vs. Security National Financial |
| Federal National vs. The Coca Cola | Federal National vs. HNI Corp | Federal National vs. SNDL Inc | Federal National vs. LGI Homes |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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