Correlation Between PennyMac Finl and Valneva SE

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

Diversification Opportunities for PennyMac Finl and Valneva SE

0.15

Correlation Coefficient

PennyMac Finl  Valneva SE

Average diversification

The 3 months correlation between PennyMac and Valneva is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Finl Svcs and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of PennyMac Finl i.e., PennyMac Finl and Valneva SE go up and down completely randomly.

Pair Corralation between PennyMac Finl and Valneva SE

Given the investment horizon of 90 days PennyMac Finl Svcs is expected to under-perform the Valneva SE. But the stock apears to be less risky and, when comparing its historical volatility, PennyMac Finl Svcs is 3.87 times less risky than Valneva SE. The stock trades about -0.12 of its potential returns per unit of risk. The Valneva SE ADR is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  403.00  in Valneva SE ADR on October 5, 2024 and sell it today you would earn a total of  34.00  from holding Valneva SE ADR or generate 8.44% 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.  Valneva SE ADR

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.

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with PennyMac Finl and Valneva SE

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

The idea behind PennyMac Finl Svcs and Valneva SE ADR 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.