Correlation Between MGIC Investment and Alabama Aircraft
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Alabama Aircraft 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 Alabama Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC Investment Corp and Alabama Aircraft Industries, you can compare the effects of market volatilities on MGIC Investment and Alabama Aircraft 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 Alabama Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Alabama Aircraft.
Diversification Opportunities for MGIC Investment and Alabama Aircraft
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MGIC and Alabama is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Alabama Aircraft Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alabama Aircraft Ind 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 Corp are associated (or correlated) with Alabama Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alabama Aircraft Ind has no effect on the direction of MGIC Investment i.e., MGIC Investment and Alabama Aircraft go up and down completely randomly.
Pair Corralation between MGIC Investment and Alabama Aircraft
If you would invest 1,514 in MGIC Investment Corp on September 2, 2024 and sell it today you would earn a total of 1,112 from holding MGIC Investment Corp or generate 73.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.27% |
| Values | Daily Returns |
MGIC Investment Corp vs. Alabama Aircraft Industries
Performance |
| Timeline |
| MGIC Investment Corp |
| Alabama Aircraft Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MGIC Investment and Alabama Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Alabama Aircraft
The main advantage of trading using opposite MGIC Investment and Alabama Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Alabama Aircraft 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 Alabama Aircraft will offset losses from the drop in Alabama Aircraft's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings |
| Alabama Aircraft vs. BRP Inc | Alabama Aircraft vs. Universal Display | Alabama Aircraft vs. Sonos Inc | Alabama Aircraft vs. Funko 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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