Correlation Between MGIC INVESTMENT and BYD ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and BYD ELECTRONIC 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 BYD ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and BYD ELECTRONIC, you can compare the effects of market volatilities on MGIC INVESTMENT and BYD ELECTRONIC 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 BYD ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and BYD ELECTRONIC.
Diversification Opportunities for MGIC INVESTMENT and BYD ELECTRONIC
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and BYD is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and BYD ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD ELECTRONIC 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 BYD ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD ELECTRONIC has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and BYD ELECTRONIC go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and BYD ELECTRONIC
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 1.12 times less return on investment than BYD ELECTRONIC. But when comparing it to its historical volatility, MGIC INVESTMENT is 3.18 times less risky than BYD ELECTRONIC. It trades about 0.13 of its potential returns per unit of risk. BYD ELECTRONIC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 253.00 in BYD ELECTRONIC on September 3, 2024 and sell it today you would earn a total of 161.00 from holding BYD ELECTRONIC or generate 63.64% 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. BYD ELECTRONIC
Performance |
| Timeline |
| MGIC INVESTMENT |
| BYD ELECTRONIC |
MGIC INVESTMENT and BYD ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and BYD ELECTRONIC
The main advantage of trading using opposite MGIC INVESTMENT and BYD ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, BYD ELECTRONIC 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 BYD ELECTRONIC will offset losses from the drop in BYD ELECTRONIC's long position.| MGIC INVESTMENT vs. TOTAL GABON | MGIC INVESTMENT vs. Walgreens Boots Alliance | MGIC INVESTMENT vs. Peak Resources Limited |
| BYD ELECTRONIC vs. RETAIL FOOD GROUP | BYD ELECTRONIC vs. MOLSON RS BEVERAGE | BYD ELECTRONIC vs. GEELY AUTOMOBILE | BYD ELECTRONIC vs. National Retail Properties |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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