Correlation Between Kinsale Capital and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Kinsale Capital 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 Kinsale Capital and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinsale Capital Group and MGIC Investment Corp, you can compare the effects of market volatilities on Kinsale Capital 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 Kinsale Capital with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinsale Capital and MGIC Investment.
Diversification Opportunities for Kinsale Capital and MGIC Investment
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinsale and MGIC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kinsale Capital 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 Kinsale Capital 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 Kinsale Capital 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 Kinsale Capital i.e., Kinsale Capital and MGIC Investment go up and down completely randomly.
Pair Corralation between Kinsale Capital and MGIC Investment
Given the investment horizon of 90 days Kinsale Capital Group is expected to generate 1.31 times more return on investment than MGIC Investment. However, Kinsale Capital is 1.31 times more volatile than MGIC Investment Corp. It trades about 0.48 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.4 per unit of risk. If you would invest 42,591 in Kinsale Capital Group on September 2, 2024 and sell it today you would earn a total of 8,253 from holding Kinsale Capital Group or generate 19.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinsale Capital Group vs. MGIC Investment Corp
Performance |
| Timeline |
| Kinsale Capital Group |
| MGIC Investment Corp |
Kinsale Capital and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinsale Capital and MGIC Investment
The main advantage of trading using opposite Kinsale Capital and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinsale Capital 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.| Kinsale Capital vs. Selective Insurance Group | Kinsale Capital vs. Horace Mann Educators | Kinsale Capital vs. Kemper | Kinsale Capital vs. ProAssurance |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings | MGIC Investment vs. James River Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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