Correlation Between MGIC Investment and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on MGIC Investment and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Arrow Electronics.
Diversification Opportunities for MGIC Investment and Arrow Electronics
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MGIC and Arrow is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of MGIC Investment i.e., MGIC Investment and Arrow Electronics go up and down completely randomly.
Pair Corralation between MGIC Investment and Arrow Electronics
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.77 times more return on investment than Arrow Electronics. However, MGIC Investment Corp is 1.29 times less risky than Arrow Electronics. It trades about -0.04 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.16 per unit of risk. If you would invest 2,362 in MGIC Investment Corp on January 5, 2025 and sell it today you would lose (48.00) from holding MGIC Investment Corp or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Arrow Electronics
Performance |
| Timeline |
| MGIC Investment Corp |
| Arrow Electronics |
MGIC Investment and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Arrow Electronics
The main advantage of trading using opposite MGIC Investment and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Arrow Electronics vs. Synnex | Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. ScanSource | Arrow Electronics vs. PC Connection |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |