Correlation Between MGIC INVESTMENT and LANDSEA HOMES
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and LANDSEA HOMES 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 LANDSEA HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and LANDSEA HOMES P, you can compare the effects of market volatilities on MGIC INVESTMENT and LANDSEA HOMES 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 LANDSEA HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and LANDSEA HOMES.
Diversification Opportunities for MGIC INVESTMENT and LANDSEA HOMES
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and LANDSEA is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and LANDSEA HOMES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA HOMES P 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 LANDSEA HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA HOMES P has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and LANDSEA HOMES go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and LANDSEA HOMES
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.48 times more return on investment than LANDSEA HOMES. However, MGIC INVESTMENT is 2.07 times less risky than LANDSEA HOMES. It trades about 0.26 of its potential returns per unit of risk. LANDSEA HOMES P is currently generating about -0.01 per unit of risk. If you would invest 2,280 in MGIC INVESTMENT on October 31, 2024 and sell it today you would earn a total of 160.00 from holding MGIC INVESTMENT or generate 7.02% 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. LANDSEA HOMES P
Performance |
| Timeline |
| MGIC INVESTMENT |
| LANDSEA HOMES P |
MGIC INVESTMENT and LANDSEA HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and LANDSEA HOMES
The main advantage of trading using opposite MGIC INVESTMENT and LANDSEA HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, LANDSEA HOMES 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 LANDSEA HOMES will offset losses from the drop in LANDSEA HOMES's long position.| MGIC INVESTMENT vs. SINGAPORE AIRLINES | MGIC INVESTMENT vs. GMO Internet | MGIC INVESTMENT vs. SCANSOURCE | MGIC INVESTMENT vs. Gol Intelligent Airlines |
| LANDSEA HOMES vs. Geely Automobile Holdings | LANDSEA HOMES vs. Spirent Communications plc | LANDSEA HOMES vs. Motorcar Parts of | LANDSEA HOMES vs. Chengdu PUTIAN Telecommunications |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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