Correlation Between MGIC Investment and Austevoll Seafood

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Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Austevoll Seafood 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 Austevoll Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC Investment and Austevoll Seafood ASA, you can compare the effects of market volatilities on MGIC Investment and Austevoll Seafood 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 Austevoll Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Austevoll Seafood.

Diversification Opportunities for MGIC Investment and Austevoll Seafood

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between MGIC and Austevoll is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment and Austevoll Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austevoll Seafood ASA 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 Austevoll Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austevoll Seafood ASA has no effect on the direction of MGIC Investment i.e., MGIC Investment and Austevoll Seafood go up and down completely randomly.

Pair Corralation between MGIC Investment and Austevoll Seafood

Assuming the 90 days horizon MGIC Investment is expected to generate 1.15 times less return on investment than Austevoll Seafood. But when comparing it to its historical volatility, MGIC Investment is 1.27 times less risky than Austevoll Seafood. It trades about 0.19 of its potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  843.00  in Austevoll Seafood ASA on November 4, 2024 and sell it today you would earn a total of  71.00  from holding Austevoll Seafood ASA or generate 8.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

MGIC Investment  vs.  Austevoll Seafood ASA

 Performance 
       Timeline  
MGIC Investment 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in MGIC Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MGIC Investment reported solid returns over the last few months and may actually be approaching a breakup point.
Austevoll Seafood ASA 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Austevoll Seafood reported solid returns over the last few months and may actually be approaching a breakup point.

MGIC Investment and Austevoll Seafood Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MGIC Investment and Austevoll Seafood

The main advantage of trading using opposite MGIC Investment and Austevoll Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Austevoll Seafood 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 Austevoll Seafood will offset losses from the drop in Austevoll Seafood's long position.
The idea behind MGIC Investment and Austevoll Seafood ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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