Correlation Between PennyMac Finl and National Bank
Can any of the company-specific risk be diversified away by investing in both PennyMac Finl and National Bank 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 National Bank 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 National Bank Holdings, you can compare the effects of market volatilities on PennyMac Finl and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Finl and National Bank.
Diversification Opportunities for PennyMac Finl and National Bank
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PennyMac and National is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Finl Svcs and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of PennyMac Finl i.e., PennyMac Finl and National Bank go up and down completely randomly.
Pair Corralation between PennyMac Finl and National Bank
Given the investment horizon of 90 days PennyMac Finl Svcs is expected to generate 0.95 times more return on investment than National Bank. However, PennyMac Finl Svcs is 1.06 times less risky than National Bank. It trades about 0.08 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.07 per unit of risk. If you would invest 6,196 in PennyMac Finl Svcs on August 27, 2024 and sell it today you would earn a total of 4,366 from holding PennyMac Finl Svcs or generate 70.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennyMac Finl Svcs vs. National Bank Holdings
Performance |
| Timeline |
| PennyMac Finl Svcs |
| National Bank Holdings |
PennyMac Finl and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Finl and National Bank
The main advantage of trading using opposite PennyMac Finl and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Finl position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| PennyMac Finl vs. National Bank Holdings | PennyMac Finl vs. Community West Bancshares | PennyMac Finl vs. Financial Institutions | PennyMac Finl vs. Kearny Financial Corp |
| National Bank vs. Fifth Third Bancorp | National Bank vs. Zions Bancorporation | National Bank vs. Huntington Bancshares Incorporated | National Bank vs. Comerica |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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