Correlation Between MGIC INVESTMENT and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Gamma Communications 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 Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Gamma Communications plc, you can compare the effects of market volatilities on MGIC INVESTMENT and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Gamma Communications.
Diversification Opportunities for MGIC INVESTMENT and Gamma Communications
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGIC and Gamma is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Gamma Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications plc 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications plc has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Gamma Communications go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Gamma Communications
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.54 times more return on investment than Gamma Communications. However, MGIC INVESTMENT is 1.84 times less risky than Gamma Communications. It trades about 0.12 of its potential returns per unit of risk. Gamma Communications plc is currently generating about 0.06 per unit of risk. If you would invest 1,157 in MGIC INVESTMENT on September 13, 2024 and sell it today you would earn a total of 1,183 from holding MGIC INVESTMENT or generate 102.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. Gamma Communications plc
Performance |
| Timeline |
| MGIC INVESTMENT |
| Gamma Communications plc |
MGIC INVESTMENT and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Gamma Communications
The main advantage of trading using opposite MGIC INVESTMENT and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc |
| Gamma Communications vs. Lamar Advertising | Gamma Communications vs. CARSALESCOM | Gamma Communications vs. Ribbon Communications | Gamma Communications vs. Charter Communications |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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