Correlation Between Summit Hotel and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and PennyMac Mortgage 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 Summit Hotel and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Hotel Properties and PennyMac Mortgage Investment, you can compare the effects of market volatilities on Summit Hotel and PennyMac Mortgage 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 Summit Hotel with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and PennyMac Mortgage.
Diversification Opportunities for Summit Hotel and PennyMac Mortgage
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Summit and PennyMac is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and Summit Hotel 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 Summit Hotel Properties are associated (or correlated) with PennyMac Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Mortgage has no effect on the direction of Summit Hotel i.e., Summit Hotel and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between Summit Hotel and PennyMac Mortgage
Assuming the 90 days horizon Summit Hotel Properties is expected to under-perform the PennyMac Mortgage. But the stock apears to be less risky and, when comparing its historical volatility, Summit Hotel Properties is 1.01 times less risky than PennyMac Mortgage. The stock trades about -0.03 of its potential returns per unit of risk. The PennyMac Mortgage Investment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,189 in PennyMac Mortgage Investment on October 22, 2024 and sell it today you would earn a total of 21.00 from holding PennyMac Mortgage Investment or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| Summit Hotel Properties |
| PennyMac Mortgage |
Summit Hotel and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and PennyMac Mortgage
The main advantage of trading using opposite Summit Hotel and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, PennyMac Mortgage 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 PennyMac Mortgage will offset losses from the drop in PennyMac Mortgage's long position.| Summit Hotel vs. DFS Furniture PLC | Summit Hotel vs. Neinor Homes SA | Summit Hotel vs. INVITATION HOMES DL | Summit Hotel vs. United Rentals |
| PennyMac Mortgage vs. PSI Software AG | PennyMac Mortgage vs. Alfa Financial Software | PennyMac Mortgage vs. Summit Hotel Properties | PennyMac Mortgage vs. Sunstone Hotel Investors |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |