Correlation Between LendingTree and PennyMac Financial
Can any of the company-specific risk be diversified away by investing in both LendingTree and PennyMac 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 LendingTree and PennyMac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LendingTree and PennyMac Financial Services, you can compare the effects of market volatilities on LendingTree and PennyMac 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 LendingTree with a short position of PennyMac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingTree and PennyMac Financial.
Diversification Opportunities for LendingTree and PennyMac Financial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LendingTree and PennyMac is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding LendingTree and PennyMac Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Financial and LendingTree 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 LendingTree are associated (or correlated) with PennyMac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Financial has no effect on the direction of LendingTree i.e., LendingTree and PennyMac Financial go up and down completely randomly.
Pair Corralation between LendingTree and PennyMac Financial
Assuming the 90 days horizon LendingTree is expected to under-perform the PennyMac Financial. In addition to that, LendingTree is 2.17 times more volatile than PennyMac Financial Services. It trades about -0.01 of its total potential returns per unit of risk. PennyMac Financial Services is currently generating about 0.05 per unit of volatility. If you would invest 9,569 in PennyMac Financial Services on November 2, 2024 and sell it today you would earn a total of 931.00 from holding PennyMac Financial Services or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LendingTree vs. PennyMac Financial Services
Performance |
| Timeline |
| LendingTree |
| PennyMac Financial |
LendingTree and PennyMac Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LendingTree and PennyMac Financial
The main advantage of trading using opposite LendingTree and PennyMac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LendingTree position performs unexpectedly, PennyMac 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 PennyMac Financial will offset losses from the drop in PennyMac Financial's long position.| LendingTree vs. MAGNUM MINING EXP | LendingTree vs. GEELY AUTOMOBILE | LendingTree vs. Carsales | LendingTree vs. Perseus Mining Limited |
| PennyMac Financial vs. Mr Cooper Group | PennyMac Financial vs. OSB GROUP PLC | PennyMac Financial vs. Deutsche Pfandbriefbank AG | PennyMac Financial vs. ELLINGTON FINL INC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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