Correlation Between PennyMac Mortgage and Ecotel Communication

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

Diversification Opportunities for PennyMac Mortgage and Ecotel Communication

-0.12

Correlation Coefficient

PennyMac Mortgage  Ecotel Communication

Good diversification

The 3 months correlation between PennyMac and Ecotel is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and ecotel communication ag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ecotel communication 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 Ecotel Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ecotel communication has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and Ecotel Communication go up and down completely randomly.

Pair Corralation between PennyMac Mortgage and Ecotel Communication

Assuming the 90 days horizon PennyMac Mortgage Investment is expected to under-perform the Ecotel Communication. But the stock apears to be less risky and, when comparing its historical volatility, PennyMac Mortgage Investment is 1.2 times less risky than Ecotel Communication. The stock trades about 0.0 of its potential returns per unit of risk. The ecotel communication ag is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,285  in ecotel communication ag on October 22, 2024 and sell it today you would earn a total of  120.00  from holding ecotel communication ag or generate 9.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PennyMac Mortgage Investment  vs.  ecotel communication ag

PennyMac Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PennyMac Mortgage Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PennyMac Mortgage is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ecotel communication

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ecotel communication ag are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Ecotel Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PennyMac Mortgage and Ecotel Communication

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

The idea behind PennyMac Mortgage Investment and ecotel communication ag 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.