Correlation Between Impac Mortgage and Essent
Can any of the company-specific risk be diversified away by investing in both Impac Mortgage and Essent 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 Impac Mortgage and Essent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impac Mortgage Holdings and Essent Group, you can compare the effects of market volatilities on Impac Mortgage and Essent 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 Impac Mortgage with a short position of Essent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impac Mortgage and Essent.
Diversification Opportunities for Impac Mortgage and Essent
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Impac and Essent is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Impac Mortgage Holdings and Essent Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essent Group and Impac 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 Impac Mortgage Holdings are associated (or correlated) with Essent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essent Group has no effect on the direction of Impac Mortgage i.e., Impac Mortgage and Essent go up and down completely randomly.
Pair Corralation between Impac Mortgage and Essent
If you would invest 5.51 in Impac Mortgage Holdings on January 26, 2024 and sell it today you would earn a total of 0.00 from holding Impac Mortgage Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Impac Mortgage Holdings vs. Essent Group
Performance |
| Timeline |
| Impac Mortgage Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Essent Group |
Impac Mortgage and Essent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impac Mortgage and Essent
The main advantage of trading using opposite Impac Mortgage and Essent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impac Mortgage position performs unexpectedly, Essent 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 Essent will offset losses from the drop in Essent's long position.| Impac Mortgage vs. CNFinance Holdings | Impac Mortgage vs. Ocwen Financial | Impac Mortgage vs. Guild HoldingsCo | Impac Mortgage vs. PennyMac Finl Svcs |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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