Correlation Between Apple and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and MGIC INVESTMENT, you can compare the effects of market volatilities on Apple 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 Apple with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and MGIC INVESTMENT.
Diversification Opportunities for Apple and MGIC INVESTMENT
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and MGIC is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and Apple 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 Apple Inc 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 has no effect on the direction of Apple i.e., Apple and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Apple and MGIC INVESTMENT
Assuming the 90 days trading horizon Apple is expected to generate 2.12 times less return on investment than MGIC INVESTMENT. In addition to that, Apple is 1.24 times more volatile than MGIC INVESTMENT. It trades about 0.05 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.14 per unit of volatility. If you would invest 1,405 in MGIC INVESTMENT on August 28, 2024 and sell it today you would earn a total of 1,035 from holding MGIC INVESTMENT or generate 73.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. MGIC INVESTMENT
Performance |
| Timeline |
| Apple Inc |
| MGIC INVESTMENT |
Apple and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and MGIC INVESTMENT
The main advantage of trading using opposite Apple and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Nordic Semiconductor ASA | Apple vs. Altair Engineering | Apple vs. FORWARD AIR P | Apple vs. Westinghouse Air Brake |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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