Correlation Between MGIC Investment and Fidelity National
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Fidelity National 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 Fidelity National 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 Fidelity National Financial, you can compare the effects of market volatilities on MGIC Investment and Fidelity National 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 Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Fidelity National.
Diversification Opportunities for MGIC Investment and Fidelity National
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MGIC and Fidelity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Fidelity National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of MGIC Investment i.e., MGIC Investment and Fidelity National go up and down completely randomly.
Pair Corralation between MGIC Investment and Fidelity National
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.95 times more return on investment than Fidelity National. However, MGIC Investment Corp is 1.05 times less risky than Fidelity National. It trades about 0.27 of its potential returns per unit of risk. Fidelity National Financial is currently generating about 0.15 per unit of risk. If you would invest 2,363 in MGIC Investment Corp on November 9, 2024 and sell it today you would earn a total of 183.00 from holding MGIC Investment Corp or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Fidelity National Financial
Performance |
| Timeline |
| MGIC Investment Corp |
| Fidelity National |
MGIC Investment and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Fidelity National
The main advantage of trading using opposite MGIC Investment and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Fidelity National vs. AXIS Capital Holdings | Fidelity National vs. Assured Guaranty | Fidelity National vs. Enact Holdings | Fidelity National vs. NMI 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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