Correlation Between MGIC INVESTMENT and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Aluminumof China 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 Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Aluminum of, you can compare the effects of market volatilities on MGIC INVESTMENT and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Aluminumof China.
Diversification Opportunities for MGIC INVESTMENT and Aluminumof China
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and Aluminumof is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Aluminumof China go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Aluminumof China
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.33 times more return on investment than Aluminumof China. However, MGIC INVESTMENT is 3.06 times less risky than Aluminumof China. It trades about 0.16 of its potential returns per unit of risk. Aluminum of is currently generating about 0.04 per unit of risk. If you would invest 2,307 in MGIC INVESTMENT on August 28, 2024 and sell it today you would earn a total of 133.00 from holding MGIC INVESTMENT or generate 5.77% 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. Aluminum of
Performance |
| Timeline |
| MGIC INVESTMENT |
| Aluminumof China |
MGIC INVESTMENT and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Aluminumof China
The main advantage of trading using opposite MGIC INVESTMENT and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.| MGIC INVESTMENT vs. Avanos Medical | MGIC INVESTMENT vs. Ryanair Holdings plc | MGIC INVESTMENT vs. MEDICAL FACILITIES NEW | MGIC INVESTMENT vs. CHINA TONTINE WINES |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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