Correlation Between Gentex and MGIC INVESTMENT

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Can any of the company-specific risk be diversified away by investing in both Gentex 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 Gentex and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentex and MGIC INVESTMENT, you can compare the effects of market volatilities on Gentex 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 Gentex with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and MGIC INVESTMENT.

Diversification Opportunities for Gentex and MGIC INVESTMENT

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Gentex and MGIC is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and Gentex 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 Gentex 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 Gentex i.e., Gentex and MGIC INVESTMENT go up and down completely randomly.

Pair Corralation between Gentex and MGIC INVESTMENT

Assuming the 90 days horizon Gentex is expected to under-perform the MGIC INVESTMENT. In addition to that, Gentex is 1.13 times more volatile than MGIC INVESTMENT. It trades about -0.26 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.15 per unit of volatility. If you would invest  2,300  in MGIC INVESTMENT on October 28, 2024 and sell it today you would earn a total of  60.00  from holding MGIC INVESTMENT or generate 2.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Gentex  vs.  MGIC INVESTMENT

 Performance 
       Timeline  
Gentex 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
MGIC INVESTMENT 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in MGIC INVESTMENT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, MGIC INVESTMENT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gentex and MGIC INVESTMENT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gentex and MGIC INVESTMENT

The main advantage of trading using opposite Gentex and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex 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.
The idea behind Gentex and MGIC INVESTMENT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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