Correlation Between PennyMac Mortgage and Continental Aktiengesellscha

Can any of the company-specific risk be diversified away by investing in both PennyMac Mortgage and Continental Aktiengesellscha 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 Continental Aktiengesellscha 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 Continental Aktiengesellschaft, you can compare the effects of market volatilities on PennyMac Mortgage and Continental Aktiengesellscha 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 Continental Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Mortgage and Continental Aktiengesellscha.

Diversification Opportunities for PennyMac Mortgage and Continental Aktiengesellscha

0.51

Correlation Coefficient

PennyMac Mortgage  Continental Aktiengesellscha

Very weak diversification

The 3 months correlation between PennyMac and Continental is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha 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 Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Continental Aktiengesellscha go up and down completely randomly.

Pair Corralation between PennyMac Mortgage and Continental Aktiengesellscha

Assuming the 90 days horizon PennyMac Mortgage Investment is expected to generate 0.56 times more return on investment than Continental Aktiengesellscha. However, PennyMac Mortgage Investment is 1.8 times less risky than Continental Aktiengesellscha. It trades about 0.15 of its potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.08 per unit of risk. If you would invest  1,210  in PennyMac Mortgage Investment on December 26, 2024 and sell it today you would earn a total of  150.00  from holding PennyMac Mortgage Investment or generate 12.4% 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.  Continental Aktiengesellschaft

PennyMac Mortgage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PennyMac Mortgage Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PennyMac Mortgage reported solid returns over the last few months and may actually be approaching a breakup point.

Continental Aktiengesellscha

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Continental Aktiengesellscha may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PennyMac Mortgage and Continental Aktiengesellscha

The main advantage of trading using opposite PennyMac Mortgage and Continental Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennyMac Mortgage position performs unexpectedly, Continental Aktiengesellscha 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 Continental Aktiengesellscha will offset losses from the drop in Continental Aktiengesellscha's long position.

The idea behind PennyMac Mortgage Investment and Continental Aktiengesellschaft pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.