Correlation Between AXIS Capital and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both AXIS Capital 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 AXIS Capital and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXIS Capital Holdings and MGIC Investment Corp, you can compare the effects of market volatilities on AXIS Capital 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 AXIS Capital with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXIS Capital and MGIC Investment.
Diversification Opportunities for AXIS Capital and MGIC Investment
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AXIS and MGIC is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings 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 AXIS Capital 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 AXIS Capital Holdings 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 AXIS Capital i.e., AXIS Capital and MGIC Investment go up and down completely randomly.
Pair Corralation between AXIS Capital and MGIC Investment
Considering the 90-day investment horizon AXIS Capital Holdings is expected to generate 0.96 times more return on investment than MGIC Investment. However, AXIS Capital Holdings is 1.04 times less risky than MGIC Investment. It trades about 0.16 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.08 per unit of risk. If you would invest 5,299 in AXIS Capital Holdings on November 9, 2024 and sell it today you would earn a total of 4,120 from holding AXIS Capital Holdings or generate 77.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXIS Capital Holdings vs. MGIC Investment Corp
Performance |
| Timeline |
| AXIS Capital Holdings |
| MGIC Investment Corp |
AXIS Capital and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXIS Capital and MGIC Investment
The main advantage of trading using opposite AXIS Capital and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXIS Capital 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.| AXIS Capital vs. Assured Guaranty | AXIS Capital vs. Enact Holdings | AXIS Capital vs. NMI Holdings | AXIS Capital vs. Radian Group |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
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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