Correlation Between REVO INSURANCE and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE 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 REVO INSURANCE and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REVO INSURANCE SPA and MGIC INVESTMENT, you can compare the effects of market volatilities on REVO INSURANCE 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 REVO INSURANCE with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and MGIC INVESTMENT.
Diversification Opportunities for REVO INSURANCE and MGIC INVESTMENT
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REVO and MGIC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and REVO INSURANCE 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 REVO INSURANCE SPA 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 REVO INSURANCE i.e., REVO INSURANCE and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between REVO INSURANCE and MGIC INVESTMENT
Assuming the 90 days horizon REVO INSURANCE SPA is expected to generate 0.84 times more return on investment than MGIC INVESTMENT. However, REVO INSURANCE SPA is 1.19 times less risky than MGIC INVESTMENT. It trades about 0.36 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.07 per unit of risk. If you would invest 1,025 in REVO INSURANCE SPA on September 15, 2024 and sell it today you would earn a total of 90.00 from holding REVO INSURANCE SPA or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REVO INSURANCE SPA vs. MGIC INVESTMENT
Performance |
| Timeline |
| REVO INSURANCE SPA |
| MGIC INVESTMENT |
REVO INSURANCE and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REVO INSURANCE and MGIC INVESTMENT
The main advantage of trading using opposite REVO INSURANCE and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.| REVO INSURANCE vs. Lyxor 1 | REVO INSURANCE vs. Xtrackers LevDAX | REVO INSURANCE vs. Xtrackers ShortDAX | REVO INSURANCE vs. Superior Plus Corp |
| MGIC INVESTMENT vs. Sterling Construction | MGIC INVESTMENT vs. Singapore Reinsurance | MGIC INVESTMENT vs. REVO INSURANCE SPA | MGIC INVESTMENT vs. Universal Insurance Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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