Correlation Between MAGNA INTL and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both MAGNA INTL 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 MAGNA INTL and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAGNA INTL and MGIC INVESTMENT, you can compare the effects of market volatilities on MAGNA INTL 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 MAGNA INTL with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGNA INTL and MGIC INVESTMENT.
Diversification Opportunities for MAGNA INTL and MGIC INVESTMENT
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAGNA and MGIC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MAGNA INTL and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and MAGNA INTL 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 MAGNA INTL 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 MAGNA INTL i.e., MAGNA INTL and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between MAGNA INTL and MGIC INVESTMENT
Assuming the 90 days trading horizon MAGNA INTL is expected to under-perform the MGIC INVESTMENT. But the stock apears to be less risky and, when comparing its historical volatility, MAGNA INTL is 1.01 times less risky than MGIC INVESTMENT. The stock trades about -0.09 of its potential returns per unit of risk. The MGIC INVESTMENT is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,300 in MGIC INVESTMENT on November 2, 2024 and sell it today you would earn a total of 140.00 from holding MGIC INVESTMENT or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGNA INTL vs. MGIC INVESTMENT
Performance |
| Timeline |
| MAGNA INTL |
| MGIC INVESTMENT |
MAGNA INTL and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGNA INTL and MGIC INVESTMENT
The main advantage of trading using opposite MAGNA INTL and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGNA INTL 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.| MAGNA INTL vs. MidCap Financial Investment | MAGNA INTL vs. AOYAMA TRADING | MAGNA INTL vs. CDL INVESTMENT | MAGNA INTL vs. BOSTON BEER A |
| MGIC INVESTMENT vs. Addtech AB | MGIC INVESTMENT vs. GLG LIFE TECH | MGIC INVESTMENT vs. Playtech plc | MGIC INVESTMENT vs. BlueScope Steel Limited |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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