Correlation Between PennyMac Finl and Velocity Financial
Can any of the company-specific risk be diversified away by investing in both PennyMac Finl and Velocity Financial 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 Velocity Financial 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 Velocity Financial Llc, you can compare the effects of market volatilities on PennyMac Finl and Velocity Financial 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 Velocity Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Finl and Velocity Financial.
Diversification Opportunities for PennyMac Finl and Velocity Financial
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PennyMac and Velocity is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Finl Svcs and Velocity Financial Llc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Velocity Financial Llc 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 Velocity Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Velocity Financial Llc has no effect on the direction of PennyMac Finl i.e., PennyMac Finl and Velocity Financial go up and down completely randomly.
Pair Corralation between PennyMac Finl and Velocity Financial
Given the investment horizon of 90 days PennyMac Finl is expected to generate 1.08 times less return on investment than Velocity Financial. In addition to that, PennyMac Finl is 1.62 times more volatile than Velocity Financial Llc. It trades about 0.19 of its total potential returns per unit of risk. Velocity Financial Llc is currently generating about 0.33 per unit of volatility. If you would invest 1,927 in Velocity Financial Llc on August 27, 2024 and sell it today you would earn a total of 121.00 from holding Velocity Financial Llc or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennyMac Finl Svcs vs. Velocity Financial Llc
Performance |
| Timeline |
| PennyMac Finl Svcs |
| Velocity Financial Llc |
PennyMac Finl and Velocity Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Finl and Velocity Financial
The main advantage of trading using opposite PennyMac Finl and Velocity Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Finl position performs unexpectedly, Velocity Financial 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 Velocity Financial will offset losses from the drop in Velocity Financial'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 |
| Velocity Financial vs. National Bank Holdings | Velocity Financial vs. Community West Bancshares | Velocity Financial vs. Financial Institutions | Velocity Financial vs. Kearny Financial Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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