Correlation Between MGIC INVESTMENT and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and CDL INVESTMENT 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 CDL INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and CDL INVESTMENT, you can compare the effects of market volatilities on MGIC INVESTMENT and CDL INVESTMENT 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 CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and CDL INVESTMENT.
Diversification Opportunities for MGIC INVESTMENT and CDL INVESTMENT
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MGIC and CDL is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT 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 CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and CDL INVESTMENT
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.53 times more return on investment than CDL INVESTMENT. However, MGIC INVESTMENT is 1.88 times less risky than CDL INVESTMENT. It trades about 0.11 of its potential returns per unit of risk. CDL INVESTMENT is currently generating about 0.01 per unit of risk. If you would invest 1,261 in MGIC INVESTMENT on November 10, 2024 and sell it today you would earn a total of 1,199 from holding MGIC INVESTMENT or generate 95.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. CDL INVESTMENT
Performance |
| Timeline |
| MGIC INVESTMENT |
| CDL INVESTMENT |
MGIC INVESTMENT and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and CDL INVESTMENT
The main advantage of trading using opposite MGIC INVESTMENT and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.| MGIC INVESTMENT vs. COMBA TELECOM SYST | MGIC INVESTMENT vs. Cellnex Telecom SA | MGIC INVESTMENT vs. Citic Telecom International | MGIC INVESTMENT vs. Peijia Medical Limited |
| CDL INVESTMENT vs. FAST RETAIL ADR | CDL INVESTMENT vs. ETFS Coffee ETC | CDL INVESTMENT vs. TRADEDOUBLER AB SK | CDL INVESTMENT vs. SALESFORCE INC CDR |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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