Correlation Between MGIC INVESTMENT and General Mills
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and General Mills 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 General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and General Mills, you can compare the effects of market volatilities on MGIC INVESTMENT and General Mills 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 General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and General Mills.
Diversification Opportunities for MGIC INVESTMENT and General Mills
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and General is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills 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 General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and General Mills go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and General Mills
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.75 times more return on investment than General Mills. However, MGIC INVESTMENT is 1.34 times less risky than General Mills. It trades about 0.13 of its potential returns per unit of risk. General Mills is currently generating about 0.07 per unit of risk. If you would invest 1,562 in MGIC INVESTMENT on September 14, 2024 and sell it today you would earn a total of 818.00 from holding MGIC INVESTMENT or generate 52.37% 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. General Mills
Performance |
| Timeline |
| MGIC INVESTMENT |
| General Mills |
MGIC INVESTMENT and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and General Mills
The main advantage of trading using opposite MGIC INVESTMENT and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc |
| General Mills vs. Air New Zealand | General Mills vs. PennantPark Investment | General Mills vs. MGIC INVESTMENT | General Mills vs. Fair Isaac Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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