Correlation Between MGIC INVESTMENT and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and NAKED WINES 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 NAKED WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and NAKED WINES PLC, you can compare the effects of market volatilities on MGIC INVESTMENT and NAKED WINES 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 NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and NAKED WINES.
Diversification Opportunities for MGIC INVESTMENT and NAKED WINES
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MGIC and NAKED is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES 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 NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and NAKED WINES go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and NAKED WINES
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.67 times more return on investment than NAKED WINES. However, MGIC INVESTMENT is 1.5 times less risky than NAKED WINES. It trades about 0.19 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about -0.18 per unit of risk. If you would invest 2,307 in MGIC INVESTMENT on September 1, 2024 and sell it today you would earn a total of 173.00 from holding MGIC INVESTMENT or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. NAKED WINES PLC
Performance |
| Timeline |
| MGIC INVESTMENT |
| NAKED WINES PLC |
MGIC INVESTMENT and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and NAKED WINES
The main advantage of trading using opposite MGIC INVESTMENT and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, NAKED WINES 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 NAKED WINES will offset losses from the drop in NAKED WINES's long position.| MGIC INVESTMENT vs. Gold Road Resources | MGIC INVESTMENT vs. PT Global Mediacom | MGIC INVESTMENT vs. TITANIUM TRANSPORTGROUP | MGIC INVESTMENT vs. Gaztransport Technigaz SA |
| NAKED WINES vs. ANDREW PELLER LTD | NAKED WINES vs. Superior Plus Corp | NAKED WINES vs. NMI Holdings | NAKED WINES vs. Origin Agritech |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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