Correlation Between Enel Chile and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Enel Chile 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 Enel Chile and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enel Chile SA and MGIC Investment Corp, you can compare the effects of market volatilities on Enel Chile 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 Enel Chile with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Chile and MGIC Investment.
Diversification Opportunities for Enel Chile and MGIC Investment
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Enel and MGIC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Enel Chile SA 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 Enel Chile 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 Enel Chile SA 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 Enel Chile i.e., Enel Chile and MGIC Investment go up and down completely randomly.
Pair Corralation between Enel Chile and MGIC Investment
Given the investment horizon of 90 days Enel Chile SA is expected to generate 1.38 times more return on investment than MGIC Investment. However, Enel Chile is 1.38 times more volatile than MGIC Investment Corp. It trades about 0.02 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about -0.26 per unit of risk. If you would invest 288.00 in Enel Chile SA on October 14, 2024 and sell it today you would earn a total of 1.00 from holding Enel Chile SA or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enel Chile SA vs. MGIC Investment Corp
Performance |
| Timeline |
| Enel Chile SA |
| MGIC Investment Corp |
Enel Chile and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enel Chile and MGIC Investment
The main advantage of trading using opposite Enel Chile and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Chile 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.| Enel Chile vs. Centrais Eltricas Brasileiras | Enel Chile vs. Korea Electric Power | Enel Chile vs. Central Puerto SA | Enel Chile vs. CMS Energy |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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