Correlation Between MGIC INVESTMENT and Automatic Data
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Automatic Data 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 Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Automatic Data Processing, you can compare the effects of market volatilities on MGIC INVESTMENT and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Automatic Data.
Diversification Opportunities for MGIC INVESTMENT and Automatic Data
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MGIC and Automatic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Automatic Data go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Automatic Data
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 1.02 times less return on investment than Automatic Data. In addition to that, MGIC INVESTMENT is 1.56 times more volatile than Automatic Data Processing. It trades about 0.2 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.32 per unit of volatility. If you would invest 26,695 in Automatic Data Processing on August 29, 2024 and sell it today you would earn a total of 2,340 from holding Automatic Data Processing or generate 8.77% 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. Automatic Data Processing
Performance |
| Timeline |
| MGIC INVESTMENT |
| Automatic Data Processing |
MGIC INVESTMENT and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Automatic Data
The main advantage of trading using opposite MGIC INVESTMENT and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Superior Plus Corp | MGIC INVESTMENT vs. SIVERS SEMICONDUCTORS AB |
| Automatic Data vs. Superior Plus Corp | Automatic Data vs. SIVERS SEMICONDUCTORS AB | Automatic Data vs. Talanx AG | Automatic Data vs. 2G ENERGY |
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.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| CEOs Directory Screen CEOs from public companies around the world |