Correlation Between MGIC INVESTMENT and Aptiv PLC
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Aptiv PLC 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 Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Aptiv PLC, you can compare the effects of market volatilities on MGIC INVESTMENT and Aptiv PLC 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 Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Aptiv PLC.
Diversification Opportunities for MGIC INVESTMENT and Aptiv PLC
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGIC and Aptiv is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC 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 Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Aptiv PLC go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Aptiv PLC
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.46 times more return on investment than Aptiv PLC. However, MGIC INVESTMENT is 2.19 times less risky than Aptiv PLC. It trades about 0.17 of its potential returns per unit of risk. Aptiv PLC is currently generating about -0.1 per unit of risk. If you would invest 1,927 in MGIC INVESTMENT on September 3, 2024 and sell it today you would earn a total of 553.00 from holding MGIC INVESTMENT or generate 28.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. Aptiv PLC
Performance |
| Timeline |
| MGIC INVESTMENT |
| Aptiv PLC |
MGIC INVESTMENT and Aptiv PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Aptiv PLC
The main advantage of trading using opposite MGIC INVESTMENT and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.| MGIC INVESTMENT vs. TOTAL GABON | MGIC INVESTMENT vs. Walgreens Boots Alliance | MGIC INVESTMENT vs. Peak Resources Limited |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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