Correlation Between PennyMac Finl and Stratasys

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

Diversification Opportunities for PennyMac Finl and Stratasys

-0.06

Correlation Coefficient

PennyMac Finl  Stratasys

Good diversification

The 3 months correlation between PennyMac and Stratasys is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Finl Svcs and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys 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 Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of PennyMac Finl i.e., PennyMac Finl and Stratasys go up and down completely randomly.

Pair Corralation between PennyMac Finl and Stratasys

Given the investment horizon of 90 days PennyMac Finl Svcs is expected to generate 0.58 times more return on investment than Stratasys. However, PennyMac Finl Svcs is 1.72 times less risky than Stratasys. It trades about 0.08 of its potential returns per unit of risk. Stratasys is currently generating about -0.02 per unit of risk. If you would invest  5,532  in PennyMac Finl Svcs on October 5, 2024 and sell it today you would earn a total of  4,452  from holding PennyMac Finl Svcs or generate 80.48% return on investment over 90 days.

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

PennyMac Finl Svcs  vs.  Stratasys

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.

Stratasys

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Stratasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PennyMac Finl and Stratasys

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

The idea behind PennyMac Finl Svcs and Stratasys 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.