Correlation Between Air Lease and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Air Lease and MGIC Investment 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 Air Lease and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and MGIC Investment Corp, you can compare the effects of market volatilities on Air Lease and MGIC Investment 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 Air Lease with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and MGIC Investment.
Diversification Opportunities for Air Lease and MGIC Investment
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and MGIC is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and MGIC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment Corp and Air Lease 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 Air Lease are associated (or correlated) with MGIC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC Investment Corp has no effect on the direction of Air Lease i.e., Air Lease and MGIC Investment go up and down completely randomly.
Pair Corralation between Air Lease and MGIC Investment
Allowing for the 90-day total investment horizon Air Lease is expected to generate 1.1 times more return on investment than MGIC Investment. However, Air Lease is 1.1 times more volatile than MGIC Investment Corp. It trades about 0.1 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.04 per unit of risk. If you would invest 4,605 in Air Lease on August 30, 2024 and sell it today you would earn a total of 466.00 from holding Air Lease or generate 10.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. MGIC Investment Corp
Performance |
| Timeline |
| Air Lease |
| MGIC Investment Corp |
Air Lease and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and MGIC Investment
The main advantage of trading using opposite Air Lease and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, MGIC Investment 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 MGIC Investment will offset losses from the drop in MGIC Investment's long position.| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
| MGIC Investment vs. AMERISAFE | MGIC Investment vs. Enact Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Radian Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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