Correlation Between MGIC INVESTMENT and Motorcar Parts
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Motorcar Parts 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 Motorcar Parts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Motorcar Parts of, you can compare the effects of market volatilities on MGIC INVESTMENT and Motorcar Parts 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 Motorcar Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Motorcar Parts.
Diversification Opportunities for MGIC INVESTMENT and Motorcar Parts
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MGIC and Motorcar is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Motorcar Parts of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motorcar Parts 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 Motorcar Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motorcar Parts has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Motorcar Parts go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Motorcar Parts
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 3.27 times less return on investment than Motorcar Parts. But when comparing it to its historical volatility, MGIC INVESTMENT is 2.05 times less risky than Motorcar Parts. It trades about 0.21 of its potential returns per unit of risk. Motorcar Parts of is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 492.00 in Motorcar Parts of on August 30, 2024 and sell it today you would earn a total of 153.00 from holding Motorcar Parts of or generate 31.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
MGIC INVESTMENT vs. Motorcar Parts of
Performance |
| Timeline |
| MGIC INVESTMENT |
| Motorcar Parts |
MGIC INVESTMENT and Motorcar Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Motorcar Parts
The main advantage of trading using opposite MGIC INVESTMENT and Motorcar Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Motorcar Parts 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 Motorcar Parts will offset losses from the drop in Motorcar Parts' long position.| MGIC INVESTMENT vs. Lion One Metals | MGIC INVESTMENT vs. Harmony Gold Mining | MGIC INVESTMENT vs. GALENA MINING LTD | MGIC INVESTMENT vs. Perseus Mining 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 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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