Correlation Between MGIC INVESTMENT and United Utilities
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and United Utilities 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 United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and United Utilities Group, you can compare the effects of market volatilities on MGIC INVESTMENT and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and United Utilities.
Diversification Opportunities for MGIC INVESTMENT and United Utilities
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MGIC and United is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and United Utilities go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and United Utilities
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.68 times more return on investment than United Utilities. However, MGIC INVESTMENT is 1.46 times less risky than United Utilities. It trades about 0.16 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.09 per unit of risk. If you would invest 1,937 in MGIC INVESTMENT on September 2, 2024 and sell it today you would earn a total of 543.00 from holding MGIC INVESTMENT or generate 28.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. United Utilities Group
Performance |
| Timeline |
| MGIC INVESTMENT |
| United Utilities |
MGIC INVESTMENT and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and United Utilities
The main advantage of trading using opposite MGIC INVESTMENT and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| MGIC INVESTMENT vs. SIVERS SEMICONDUCTORS AB | MGIC INVESTMENT vs. Darden Restaurants | MGIC INVESTMENT vs. Reliance Steel Aluminum | MGIC INVESTMENT vs. Q2M Managementberatung AG |
| United Utilities vs. Guangdong Investment Limited | United Utilities vs. Superior Plus Corp | United Utilities vs. NMI Holdings | United Utilities 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |