Correlation Between MGIC INVESTMENT and United Insurance
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and United Insurance 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 United Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and United Insurance Holdings, you can compare the effects of market volatilities on MGIC INVESTMENT and United Insurance 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 United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and United Insurance.
Diversification Opportunities for MGIC INVESTMENT and United Insurance
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and United is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and United Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance Holdings 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 United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance Holdings has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and United Insurance go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and United Insurance
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 3.81 times less return on investment than United Insurance. But when comparing it to its historical volatility, MGIC INVESTMENT is 2.19 times less risky than United Insurance. It trades about 0.07 of its potential returns per unit of risk. United Insurance Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,230 in United Insurance Holdings on September 15, 2024 and sell it today you would earn a total of 80.00 from holding United Insurance Holdings or generate 6.5% 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. United Insurance Holdings
Performance |
| Timeline |
| MGIC INVESTMENT |
| United Insurance Holdings |
MGIC INVESTMENT and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and United Insurance
The main advantage of trading using opposite MGIC INVESTMENT and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, United Insurance 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 United Insurance will offset losses from the drop in United Insurance's long position.| MGIC INVESTMENT vs. Sterling Construction | MGIC INVESTMENT vs. Singapore Reinsurance | MGIC INVESTMENT vs. REVO INSURANCE SPA | MGIC INVESTMENT vs. Universal Insurance Holdings |
| United Insurance vs. Insurance Australia Group | United Insurance vs. Superior Plus Corp | United Insurance vs. SIVERS SEMICONDUCTORS AB | United Insurance vs. CHINA HUARONG ENERHD 50 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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