Correlation Between Enersys and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Enersys 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 Enersys and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enersys and MGIC Investment Corp, you can compare the effects of market volatilities on Enersys 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 Enersys with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enersys and MGIC Investment.
Diversification Opportunities for Enersys and MGIC Investment
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Enersys and MGIC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Enersys 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 Enersys 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 Enersys 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 Enersys i.e., Enersys and MGIC Investment go up and down completely randomly.
Pair Corralation between Enersys and MGIC Investment
Considering the 90-day investment horizon Enersys is expected to generate 13.69 times less return on investment than MGIC Investment. In addition to that, Enersys is 1.47 times more volatile than MGIC Investment Corp. It trades about 0.02 of its total potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.37 per unit of volatility. If you would invest 2,340 in MGIC Investment Corp on September 4, 2024 and sell it today you would earn a total of 263.00 from holding MGIC Investment Corp or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enersys vs. MGIC Investment Corp
Performance |
| Timeline |
| Enersys |
| MGIC Investment Corp |
Enersys and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enersys and MGIC Investment
The main advantage of trading using opposite Enersys and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enersys 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.| Enersys vs. Advanced Energy Industries | Enersys vs. Hubbell | Enersys vs. Acuity Brands | Enersys vs. Kimball Electronics |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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