Correlation Between MGIC Investment and Dennys Corp
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Dennys Corp 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 Dennys Corp 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 Dennys Corp, you can compare the effects of market volatilities on MGIC Investment and Dennys Corp 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 Dennys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Dennys Corp.
Diversification Opportunities for MGIC Investment and Dennys Corp
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between MGIC and Dennys is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp 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 Dennys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dennys Corp has no effect on the direction of MGIC Investment i.e., MGIC Investment and Dennys Corp go up and down completely randomly.
Pair Corralation between MGIC Investment and Dennys Corp
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.59 times more return on investment than Dennys Corp. However, MGIC Investment Corp is 1.68 times less risky than Dennys Corp. It trades about 0.14 of its potential returns per unit of risk. Dennys Corp is currently generating about 0.05 per unit of risk. If you would invest 2,491 in MGIC Investment Corp on September 1, 2024 and sell it today you would earn a total of 135.00 from holding MGIC Investment Corp or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Dennys Corp
Performance |
| Timeline |
| MGIC Investment Corp |
| Dennys Corp |
MGIC Investment and Dennys Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Dennys Corp
The main advantage of trading using opposite MGIC Investment and Dennys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Dennys Corp 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 Dennys Corp will offset losses from the drop in Dennys Corp's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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