Correlation Between MGIC Investment and AMERISAFE
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and AMERISAFE 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 AMERISAFE 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 AMERISAFE, you can compare the effects of market volatilities on MGIC Investment and AMERISAFE 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 AMERISAFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and AMERISAFE.
Diversification Opportunities for MGIC Investment and AMERISAFE
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and AMERISAFE is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and AMERISAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERISAFE 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 AMERISAFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERISAFE has no effect on the direction of MGIC Investment i.e., MGIC Investment and AMERISAFE go up and down completely randomly.
Pair Corralation between MGIC Investment and AMERISAFE
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 1.02 times more return on investment than AMERISAFE. However, MGIC Investment is 1.02 times more volatile than AMERISAFE. It trades about 0.2 of its potential returns per unit of risk. AMERISAFE is currently generating about -0.04 per unit of risk. If you would invest 2,332 in MGIC Investment Corp on October 20, 2024 and sell it today you would earn a total of 114.00 from holding MGIC Investment Corp or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. AMERISAFE
Performance |
| Timeline |
| MGIC Investment Corp |
| AMERISAFE |
MGIC Investment and AMERISAFE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and AMERISAFE
The main advantage of trading using opposite MGIC Investment and AMERISAFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, AMERISAFE 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 AMERISAFE will offset losses from the drop in AMERISAFE's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| AMERISAFE vs. Assured Guaranty | AMERISAFE vs. MBIA Inc | AMERISAFE vs. Enact Holdings | AMERISAFE vs. ICC Holdings |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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