Correlation Between MGIC INVESTMENT and EDISON INTL
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and EDISON INTL 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 EDISON INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and EDISON INTL, you can compare the effects of market volatilities on MGIC INVESTMENT and EDISON INTL 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 EDISON INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and EDISON INTL.
Diversification Opportunities for MGIC INVESTMENT and EDISON INTL
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MGIC and EDISON is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and EDISON INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDISON INTL 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 EDISON INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDISON INTL has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and EDISON INTL go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and EDISON INTL
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 1.14 times more return on investment than EDISON INTL. However, MGIC INVESTMENT is 1.14 times more volatile than EDISON INTL. It trades about 0.09 of its potential returns per unit of risk. EDISON INTL is currently generating about 0.05 per unit of risk. If you would invest 2,280 in MGIC INVESTMENT on September 12, 2024 and sell it today you would earn a total of 60.00 from holding MGIC INVESTMENT or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
MGIC INVESTMENT vs. EDISON INTL
Performance |
| Timeline |
| MGIC INVESTMENT |
| EDISON INTL |
MGIC INVESTMENT and EDISON INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and EDISON INTL
The main advantage of trading using opposite MGIC INVESTMENT and EDISON INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, EDISON INTL 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 EDISON INTL will offset losses from the drop in EDISON INTL's long position.| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc |
| EDISON INTL vs. Bausch Health Companies | EDISON INTL vs. GUARDANT HEALTH CL | EDISON INTL vs. Virtus Investment Partners | EDISON INTL vs. MGIC INVESTMENT |
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 CEOs Directory module to screen CEOs from public companies around the world.
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