Correlation Between Western Asset and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and MGIC Investment Corp, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and MGIC Investment.
Diversification Opportunities for Western Asset and MGIC Investment
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and MGIC is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment 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 Western Asset 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 Western Asset Investment 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 Western Asset i.e., Western Asset and MGIC Investment go up and down completely randomly.
Pair Corralation between Western Asset and MGIC Investment
Considering the 90-day investment horizon Western Asset is expected to generate 13.33 times less return on investment than MGIC Investment. But when comparing it to its historical volatility, Western Asset Investment is 3.02 times less risky than MGIC Investment. It trades about 0.03 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,020 in MGIC Investment Corp on August 26, 2024 and sell it today you would earn a total of 530.00 from holding MGIC Investment Corp or generate 26.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. MGIC Investment Corp
Performance |
| Timeline |
| Western Asset Investment |
| MGIC Investment Corp |
Western Asset and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and MGIC Investment
The main advantage of trading using opposite Western Asset and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. PowerUp Acquisition Corp | Western Asset vs. Aurora Innovation | Western Asset vs. HUMANA INC | Western Asset vs. Aquagold International |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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