Correlation Between MGIC INVESTMENT and Stanley Electric
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Stanley Electric 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 Stanley Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Stanley Electric Co, you can compare the effects of market volatilities on MGIC INVESTMENT and Stanley Electric 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 Stanley Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Stanley Electric.
Diversification Opportunities for MGIC INVESTMENT and Stanley Electric
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGIC and Stanley is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Stanley Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Electric 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 Stanley Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Electric has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Stanley Electric go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Stanley Electric
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to under-perform the Stanley Electric. But the stock apears to be less risky and, when comparing its historical volatility, MGIC INVESTMENT is 1.01 times less risky than Stanley Electric. The stock trades about -0.13 of its potential returns per unit of risk. The Stanley Electric Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,540 in Stanley Electric Co on September 22, 2024 and sell it today you would lose (10.00) from holding Stanley Electric Co or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. Stanley Electric Co
Performance |
| Timeline |
| MGIC INVESTMENT |
| Stanley Electric |
MGIC INVESTMENT and Stanley Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Stanley Electric
The main advantage of trading using opposite MGIC INVESTMENT and Stanley Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Stanley Electric 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 Stanley Electric will offset losses from the drop in Stanley Electric's long position.| MGIC INVESTMENT vs. Highlight Communications AG | MGIC INVESTMENT vs. Verizon Communications | MGIC INVESTMENT vs. Air Lease | MGIC INVESTMENT vs. China Communications Services |
| Stanley Electric vs. Micron Technology | Stanley Electric vs. FANDIFI TECHNOLOGY P | Stanley Electric vs. BJs Restaurants | Stanley Electric vs. British American Tobacco |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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