Correlation Between MGIC Investment and Ambac Financial
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Ambac Financial 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 MGIC Investment and Ambac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC Investment and Ambac Financial Group, you can compare the effects of market volatilities on MGIC Investment and Ambac Financial 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 MGIC Investment with a short position of Ambac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Ambac Financial.
Diversification Opportunities for MGIC Investment and Ambac Financial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and Ambac is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment and Ambac Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambac Financial Group and MGIC Investment 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 MGIC Investment are associated (or correlated) with Ambac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambac Financial Group has no effect on the direction of MGIC Investment i.e., MGIC Investment and Ambac Financial go up and down completely randomly.
Pair Corralation between MGIC Investment and Ambac Financial
Assuming the 90 days horizon MGIC Investment is expected to generate 0.61 times more return on investment than Ambac Financial. However, MGIC Investment is 1.64 times less risky than Ambac Financial. It trades about 0.11 of its potential returns per unit of risk. Ambac Financial Group is currently generating about -0.01 per unit of risk. If you would invest 1,119 in MGIC Investment on October 1, 2024 and sell it today you would earn a total of 1,181 from holding MGIC Investment or generate 105.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment vs. Ambac Financial Group
Performance |
| Timeline |
| MGIC Investment |
| Ambac Financial Group |
MGIC Investment and Ambac Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Ambac Financial
The main advantage of trading using opposite MGIC Investment and Ambac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Ambac Financial 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 Ambac Financial will offset losses from the drop in Ambac Financial's long position.| MGIC Investment vs. Datadog | MGIC Investment vs. Casio Computer CoLtd | MGIC Investment vs. Microchip Technology Incorporated | MGIC Investment vs. FANDIFI TECHNOLOGY P |
| Ambac Financial vs. First American Financial | Ambac Financial vs. nib holdings limited | Ambac Financial vs. Lancashire Holdings Limited | Ambac Financial vs. Trisura 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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