Correlation Between James River and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both James River 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 James River and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James River Group and MGIC Investment Corp, you can compare the effects of market volatilities on James River 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 James River with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of James River and MGIC Investment.
Diversification Opportunities for James River and MGIC Investment
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between James and MGIC is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding James River Group 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 James River 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 James River Group 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 James River i.e., James River and MGIC Investment go up and down completely randomly.
Pair Corralation between James River and MGIC Investment
Given the investment horizon of 90 days James River Group is expected to under-perform the MGIC Investment. In addition to that, James River is 2.7 times more volatile than MGIC Investment Corp. It trades about -0.08 of its total potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.11 per unit of volatility. If you would invest 1,482 in MGIC Investment Corp on August 27, 2024 and sell it today you would earn a total of 1,068 from holding MGIC Investment Corp or generate 72.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
James River Group vs. MGIC Investment Corp
Performance |
| Timeline |
| James River Group |
| MGIC Investment Corp |
James River and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James River and MGIC Investment
The main advantage of trading using opposite James River and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James River 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.| James River vs. Employers Holdings | James River vs. Investors Title | James River vs. AMERISAFE | James River vs. Essent Group |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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