Correlation Between PennyMac Finl and GeoVax Labs

Can any of the company-specific risk be diversified away by investing in both PennyMac Finl and GeoVax Labs 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 Finl and GeoVax Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PennyMac Finl Svcs and GeoVax Labs, you can compare the effects of market volatilities on PennyMac Finl and GeoVax Labs 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 Finl with a short position of GeoVax Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Finl and GeoVax Labs.

Diversification Opportunities for PennyMac Finl and GeoVax Labs

0.16

Correlation Coefficient

PennyMac Finl  GeoVax Labs

Average diversification

The 3 months correlation between PennyMac and GeoVax is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Finl Svcs and GeoVax Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoVax Labs and PennyMac Finl 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 Finl Svcs are associated (or correlated) with GeoVax Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoVax Labs has no effect on the direction of PennyMac Finl i.e., PennyMac Finl and GeoVax Labs go up and down completely randomly.

Pair Corralation between PennyMac Finl and GeoVax Labs

Given the investment horizon of 90 days PennyMac Finl Svcs is expected to under-perform the GeoVax Labs. But the stock apears to be less risky and, when comparing its historical volatility, PennyMac Finl Svcs is 3.39 times less risky than GeoVax Labs. The stock trades about -0.14 of its potential returns per unit of risk. The GeoVax Labs is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  235.00  in GeoVax Labs on October 4, 2024 and sell it today you would earn a total of  12.00  from holding GeoVax Labs or generate 5.11% return on investment over 90 days.

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

PennyMac Finl Svcs  vs.  GeoVax Labs

PennyMac Finl Svcs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PennyMac Finl Svcs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, PennyMac Finl is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

GeoVax Labs

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GeoVax Labs are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, GeoVax Labs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PennyMac Finl and GeoVax Labs

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

The idea behind PennyMac Finl Svcs and GeoVax Labs 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.

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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.