Correlation Between MGIC INVESTMENT and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Fevertree Drinks 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 Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Fevertree Drinks PLC, you can compare the effects of market volatilities on MGIC INVESTMENT and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Fevertree Drinks.
Diversification Opportunities for MGIC INVESTMENT and Fevertree Drinks
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MGIC and Fevertree is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Fevertree Drinks go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Fevertree Drinks
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 16.69 times less return on investment than Fevertree Drinks. But when comparing it to its historical volatility, MGIC INVESTMENT is 1.45 times less risky than Fevertree Drinks. It trades about 0.01 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 855.00 in Fevertree Drinks PLC on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Fevertree Drinks PLC or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. Fevertree Drinks PLC
Performance |
| Timeline |
| MGIC INVESTMENT |
| Fevertree Drinks PLC |
MGIC INVESTMENT and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Fevertree Drinks
The main advantage of trading using opposite MGIC INVESTMENT and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc |
| Fevertree Drinks vs. Ming Le Sports | Fevertree Drinks vs. SPORT LISBOA E | Fevertree Drinks vs. MGIC INVESTMENT | Fevertree Drinks vs. Big 5 Sporting |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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