Correlation Between MGIC INVESTMENT and Nokia
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Nokia 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 Nokia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Nokia, you can compare the effects of market volatilities on MGIC INVESTMENT and Nokia 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 Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Nokia.
Diversification Opportunities for MGIC INVESTMENT and Nokia
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MGIC and Nokia is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia 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 Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Nokia go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Nokia
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.66 times more return on investment than Nokia. However, MGIC INVESTMENT is 1.52 times less risky than Nokia. It trades about 0.13 of its potential returns per unit of risk. Nokia 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 | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
MGIC INVESTMENT vs. Nokia
Performance |
| Timeline |
| MGIC INVESTMENT |
| Nokia |
MGIC INVESTMENT and Nokia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Nokia
The main advantage of trading using opposite MGIC INVESTMENT and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Nokia 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 Nokia will offset losses from the drop in Nokia's long position.| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc |
| Nokia vs. Wizz Air Holdings | Nokia vs. MGIC INVESTMENT | Nokia vs. REGAL ASIAN INVESTMENTS | Nokia vs. MYFAIR GOLD P |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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