Correlation Between PennyMac Finl and UWM Holdings
Can any of the company-specific risk be diversified away by investing in both PennyMac Finl and UWM Holdings 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 UWM Holdings 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 UWM Holdings Corp, you can compare the effects of market volatilities on PennyMac Finl and UWM Holdings 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 UWM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Finl and UWM Holdings.
Diversification Opportunities for PennyMac Finl and UWM Holdings
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennyMac and UWM is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Finl Svcs and UWM Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UWM Holdings Corp 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 UWM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UWM Holdings Corp has no effect on the direction of PennyMac Finl i.e., PennyMac Finl and UWM Holdings go up and down completely randomly.
Pair Corralation between PennyMac Finl and UWM Holdings
Given the investment horizon of 90 days PennyMac Finl Svcs is expected to generate 0.52 times more return on investment than UWM Holdings. However, PennyMac Finl Svcs is 1.93 times less risky than UWM Holdings. It trades about 0.15 of its potential returns per unit of risk. UWM Holdings Corp is currently generating about -0.15 per unit of risk. If you would invest 9,973 in PennyMac Finl Svcs on August 24, 2024 and sell it today you would earn a total of 422.00 from holding PennyMac Finl Svcs or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennyMac Finl Svcs vs. UWM Holdings Corp
Performance |
| Timeline |
| PennyMac Finl Svcs |
| UWM Holdings Corp |
PennyMac Finl and UWM Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Finl and UWM Holdings
The main advantage of trading using opposite PennyMac Finl and UWM Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Finl position performs unexpectedly, UWM Holdings 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 UWM Holdings will offset losses from the drop in UWM Holdings' 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 |
| UWM Holdings vs. Loandepot | UWM Holdings vs. Mr Cooper Group | UWM Holdings vs. PennyMac Finl Svcs | UWM Holdings vs. Walker Dunlop |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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