Correlation Between PennyMac Mortgage and CVR Medical

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

Diversification Opportunities for PennyMac Mortgage and CVR Medical

0.0

Correlation Coefficient

PennyMac Mortgage  CVR Medical

Pay attention - limited upside

The 3 months correlation between PennyMac and CVR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Mortgage Investment and CVR Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Medical Corp 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 CVR Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Medical Corp has no effect on the direction of PennyMac Mortgage i.e., PennyMac Mortgage and CVR Medical go up and down completely randomly.

Pair Corralation between PennyMac Mortgage and CVR Medical

If you would invest  1.35  in CVR Medical Corp on March 2, 2024 and sell it today you would earn a total of  0.00  from holding CVR Medical Corp or generate 0.0% return on investment over 90 days.

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

PennyMac Mortgage Investment  vs.  CVR Medical Corp

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

CVR Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CVR Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PennyMac Mortgage and CVR Medical

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

The idea behind PennyMac Mortgage Investment and CVR Medical Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.