Correlation Between MGIC INVESTMENT and Lyft
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Lyft 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 Lyft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Lyft Inc, you can compare the effects of market volatilities on MGIC INVESTMENT and Lyft 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 Lyft. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Lyft.
Diversification Opportunities for MGIC INVESTMENT and Lyft
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MGIC and Lyft is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Lyft Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyft Inc 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 Lyft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyft Inc has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Lyft go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Lyft
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 4.29 times less return on investment than Lyft. But when comparing it to its historical volatility, MGIC INVESTMENT is 3.35 times less risky than Lyft. It trades about 0.19 of its potential returns per unit of risk. Lyft Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,209 in Lyft Inc on September 2, 2024 and sell it today you would earn a total of 404.00 from holding Lyft Inc or generate 33.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. Lyft Inc
Performance |
| Timeline |
| MGIC INVESTMENT |
| Lyft Inc |
MGIC INVESTMENT and Lyft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Lyft
The main advantage of trading using opposite MGIC INVESTMENT and Lyft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Lyft 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 Lyft will offset losses from the drop in Lyft's long position.| MGIC INVESTMENT vs. SIVERS SEMICONDUCTORS AB | MGIC INVESTMENT vs. Darden Restaurants | MGIC INVESTMENT vs. Reliance Steel Aluminum | MGIC INVESTMENT vs. Q2M Managementberatung AG |
| Lyft vs. BE Semiconductor Industries | Lyft vs. LIFENET INSURANCE CO | Lyft vs. INSURANCE AUST GRP | Lyft vs. Direct Line Insurance |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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