Correlation Between PennyMac Finl and Home Point

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

Diversification Opportunities for PennyMac Finl and Home Point

-0.36

Correlation Coefficient

PennyMac Finl  Home Point

Very good diversification

The 3 months correlation between PennyMac and Home is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Finl Svcs and Home Point Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Point Capital 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 Home Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Point Capital has no effect on the direction of PennyMac Finl i.e., PennyMac Finl and Home Point go up and down completely randomly.

Pair Corralation between PennyMac Finl and Home Point

If you would invest  10,566  in PennyMac Finl Svcs on August 31, 2024 and sell it today you would earn a total of  121.00  from holding PennyMac Finl Svcs or generate 1.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

PennyMac Finl Svcs  vs.  Home Point Capital

PennyMac Finl Svcs

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PennyMac Finl Svcs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Home Point Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PennyMac Finl and Home Point

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

The idea behind PennyMac Finl Svcs and Home Point Capital 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.