Correlation Between MGIC INVESTMENT and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and NMI Holdings 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 NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and NMI Holdings, you can compare the effects of market volatilities on MGIC INVESTMENT and NMI Holdings 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 NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and NMI Holdings.
Diversification Opportunities for MGIC INVESTMENT and NMI Holdings
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MGIC and NMI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI 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 NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and NMI Holdings go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and NMI Holdings
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.71 times more return on investment than NMI Holdings. However, MGIC INVESTMENT is 1.4 times less risky than NMI Holdings. It trades about 0.28 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.14 per unit of risk. If you would invest 2,300 in MGIC INVESTMENT on November 4, 2024 and sell it today you would earn a total of 180.00 from holding MGIC INVESTMENT or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. NMI Holdings
Performance |
| Timeline |
| MGIC INVESTMENT |
| NMI Holdings |
MGIC INVESTMENT and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and NMI Holdings
The main advantage of trading using opposite MGIC INVESTMENT and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| MGIC INVESTMENT vs. MARKET VECTR RETAIL | MGIC INVESTMENT vs. CANON MARKETING JP | MGIC INVESTMENT vs. G8 EDUCATION | MGIC INVESTMENT vs. SALESFORCE INC CDR |
| NMI Holdings vs. DFS Furniture PLC | NMI Holdings vs. CITY OFFICE REIT | NMI Holdings vs. COMPUTERSHARE | NMI Holdings vs. NorAm Drilling AS |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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