Correlation Between MGIC Investment and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Estee Lauder 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 Estee Lauder 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 Estee Lauder Companies, you can compare the effects of market volatilities on MGIC Investment and Estee Lauder 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 Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Estee Lauder.
Diversification Opportunities for MGIC Investment and Estee Lauder
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MGIC and Estee is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Estee Lauder Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estee Lauder Companies 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 Estee Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estee Lauder Companies has no effect on the direction of MGIC Investment i.e., MGIC Investment and Estee Lauder go up and down completely randomly.
Pair Corralation between MGIC Investment and Estee Lauder
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.42 times more return on investment than Estee Lauder. However, MGIC Investment Corp is 2.36 times less risky than Estee Lauder. It trades about 0.0 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.12 per unit of risk. If you would invest 2,331 in MGIC Investment Corp on January 5, 2025 and sell it today you would lose (17.00) from holding MGIC Investment Corp or give up 0.73% 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. Estee Lauder Companies
Performance |
| Timeline |
| MGIC Investment Corp |
| Estee Lauder Companies |
MGIC Investment and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Estee Lauder
The main advantage of trading using opposite MGIC Investment and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Estee Lauder 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 Estee Lauder will offset losses from the drop in Estee Lauder's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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