Correlation Between MGIC INVESTMENT and Shenandoah Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Shenandoah Telecommunications, you can compare the effects of market volatilities on MGIC INVESTMENT and Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Shenandoah Telecommunicatio.
Diversification Opportunities for MGIC INVESTMENT and Shenandoah Telecommunicatio
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGIC and Shenandoah is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Shenandoah Telecommunicatio go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Shenandoah Telecommunicatio
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.42 times more return on investment than Shenandoah Telecommunicatio. However, MGIC INVESTMENT is 2.36 times less risky than Shenandoah Telecommunicatio. It trades about 0.12 of its potential returns per unit of risk. Shenandoah Telecommunications is currently generating about 0.0 per unit of risk. If you would invest 1,157 in MGIC INVESTMENT on September 13, 2024 and sell it today you would earn a total of 1,183 from holding MGIC INVESTMENT or generate 102.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. Shenandoah Telecommunications
Performance |
| Timeline |
| MGIC INVESTMENT |
| Shenandoah Telecommunicatio |
MGIC INVESTMENT and Shenandoah Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Shenandoah Telecommunicatio
The main advantage of trading using opposite MGIC INVESTMENT and Shenandoah Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio will offset losses from the drop in Shenandoah Telecommunicatio's long position.| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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