Correlation Between MGIC Investment and Chemours
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Chemours 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 Chemours 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 Chemours Co, you can compare the effects of market volatilities on MGIC Investment and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Chemours.
Diversification Opportunities for MGIC Investment and Chemours
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and Chemours is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of MGIC Investment i.e., MGIC Investment and Chemours go up and down completely randomly.
Pair Corralation between MGIC Investment and Chemours
Considering the 90-day investment horizon MGIC Investment is expected to generate 3.31 times less return on investment than Chemours. But when comparing it to its historical volatility, MGIC Investment Corp is 2.23 times less risky than Chemours. It trades about 0.06 of its potential returns per unit of risk. Chemours Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,839 in Chemours Co on September 2, 2024 and sell it today you would earn a total of 335.00 from holding Chemours Co or generate 18.22% 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. Chemours Co
Performance |
| Timeline |
| MGIC Investment Corp |
| Chemours |
MGIC Investment and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Chemours
The main advantage of trading using opposite MGIC Investment and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings | MGIC Investment vs. James River Group |
| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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