Correlation Between MGIC INVESTMENT and UmweltBank
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and UmweltBank 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 UmweltBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and UmweltBank AG, you can compare the effects of market volatilities on MGIC INVESTMENT and UmweltBank 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 UmweltBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and UmweltBank.
Diversification Opportunities for MGIC INVESTMENT and UmweltBank
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and UmweltBank is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and UmweltBank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UmweltBank AG 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 UmweltBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UmweltBank AG has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and UmweltBank go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and UmweltBank
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.8 times more return on investment than UmweltBank. However, MGIC INVESTMENT is 1.25 times less risky than UmweltBank. It trades about 0.21 of its potential returns per unit of risk. UmweltBank AG is currently generating about -0.13 per unit of risk. If you would invest 2,280 in MGIC INVESTMENT on October 29, 2024 and sell it today you would earn a total of 80.00 from holding MGIC INVESTMENT or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. UmweltBank AG
Performance |
| Timeline |
| MGIC INVESTMENT |
| UmweltBank AG |
MGIC INVESTMENT and UmweltBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and UmweltBank
The main advantage of trading using opposite MGIC INVESTMENT and UmweltBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, UmweltBank 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 UmweltBank will offset losses from the drop in UmweltBank's long position.| MGIC INVESTMENT vs. Synovus Financial Corp | MGIC INVESTMENT vs. MAGNUM MINING EXP | MGIC INVESTMENT vs. SUN LIFE FINANCIAL | MGIC INVESTMENT vs. MAG SILVER |
| UmweltBank vs. CHAMPION IRON | UmweltBank vs. SLR Investment Corp | UmweltBank vs. REINET INVESTMENTS SCA | UmweltBank vs. Chuangs China Investments |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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