Correlation Between PennyMac Mortgage and Ready Capital
Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and Ready Capital 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 Mortgage and Ready Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennyMac Mortgage Investment and Ready Capital, you can compare the effects of market volatilities on PennyMac Mortgage and Ready Capital 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 Mortgage with a short position of Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and Ready Capital.
Diversification Opportunities for PennyMac Mortgage and Ready Capital
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennyMac and Ready is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital and PennyMac Mortgage 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 Mortgage Investment are associated (or correlated) with Ready Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ready Capital has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Ready Capital go up and down completely randomly.
Pair Corralation between PennyMac Mortgage and Ready Capital
Assuming the 90 days trading horizon PennyMac Mortgage Investment is expected to generate 1.67 times more return on investment than Ready Capital. However, PennyMac Mortgage is 1.67 times more volatile than Ready Capital. It trades about 0.07 of its potential returns per unit of risk. Ready Capital is currently generating about -0.38 per unit of risk. If you would invest 2,057 in PennyMac Mortgage Investment on August 30, 2024 and sell it today you would earn a total of 23.00 from holding PennyMac Mortgage Investment or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennyMac Mortgage Investment vs. Ready Capital
Performance |
| Timeline |
| PennyMac Mortgage |
| Ready Capital |
PennyMac Mortgage and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennyMac Mortgage and Ready Capital
The main advantage of trading using opposite PennyMac Mortgage and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, Ready Capital 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 Ready Capital will offset losses from the drop in Ready Capital's long position.| PennyMac Mortgage vs. ACRES Commercial Realty | PennyMac Mortgage vs. Dynex Capital | PennyMac Mortgage vs. PennyMac Mortgage Investment | PennyMac Mortgage vs. AG Mortgage Investment |
| Ready Capital vs. Ready Capital | Ready Capital vs. ARMOUR Residential REIT | Ready Capital vs. PennyMac Mortgage Investment | Ready Capital vs. MFA Financial |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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