Correlation Between Virtus Investment and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both Virtus Investment 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 Virtus Investment and PennyMac Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Investment Partners and PennyMac Mortgage Investment, you can compare the effects of market volatilities on Virtus Investment 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 Virtus Investment with a short position of PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Investment and PennyMac Mortgage.
Diversification Opportunities for Virtus Investment and PennyMac Mortgage
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Virtus and PennyMac is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage and Virtus Investment 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 Virtus Investment Partners 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 Virtus Investment i.e., Virtus Investment and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between Virtus Investment and PennyMac Mortgage
Assuming the 90 days horizon Virtus Investment Partners is expected to generate 1.5 times more return on investment than PennyMac Mortgage. However, Virtus Investment is 1.5 times more volatile than PennyMac Mortgage Investment. It trades about 0.02 of its potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about 0.0 per unit of risk. If you would invest 21,382 in Virtus Investment Partners on August 25, 2024 and sell it today you would earn a total of 818.00 from holding Virtus Investment Partners or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus Investment Partners vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| Virtus Investment |
| PennyMac Mortgage |
Virtus Investment and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Investment and PennyMac Mortgage
The main advantage of trading using opposite Virtus Investment and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Investment 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.| Virtus Investment vs. The Bank of | Virtus Investment vs. Ares Management Corp | Virtus Investment vs. Superior Plus Corp | Virtus Investment vs. NMI Holdings |
| PennyMac Mortgage vs. Superior Plus Corp | PennyMac Mortgage vs. NMI Holdings | PennyMac Mortgage vs. Origin Agritech | PennyMac Mortgage vs. SIVERS SEMICONDUCTORS AB |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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