Correlation Between MGIC Investment and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Asbury Automotive 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 Asbury Automotive 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 Asbury Automotive Group, you can compare the effects of market volatilities on MGIC Investment and Asbury Automotive 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 Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Asbury Automotive.
Diversification Opportunities for MGIC Investment and Asbury Automotive
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between MGIC and Asbury is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive 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 Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of MGIC Investment i.e., MGIC Investment and Asbury Automotive go up and down completely randomly.
Pair Corralation between MGIC Investment and Asbury Automotive
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.87 times more return on investment than Asbury Automotive. However, MGIC Investment Corp is 1.15 times less risky than Asbury Automotive. It trades about 0.0 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about -0.09 per unit of risk. If you would invest 2,491 in MGIC Investment Corp on September 12, 2024 and sell it today you would lose (8.00) from holding MGIC Investment Corp or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Asbury Automotive Group
Performance |
| Timeline |
| MGIC Investment Corp |
| Asbury Automotive |
MGIC Investment and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Asbury Automotive
The main advantage of trading using opposite MGIC Investment and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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