Correlation Between MGIC Investment and Hippo Holdings
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Hippo Holdings 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 Hippo Holdings 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 Hippo Holdings, you can compare the effects of market volatilities on MGIC Investment and Hippo Holdings 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 Hippo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Hippo Holdings.
Diversification Opportunities for MGIC Investment and Hippo Holdings
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGIC and Hippo is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Hippo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hippo Holdings 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 Hippo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hippo Holdings has no effect on the direction of MGIC Investment i.e., MGIC Investment and Hippo Holdings go up and down completely randomly.
Pair Corralation between MGIC Investment and Hippo Holdings
Considering the 90-day investment horizon MGIC Investment is expected to generate 27.68 times less return on investment than Hippo Holdings. But when comparing it to its historical volatility, MGIC Investment Corp is 3.6 times less risky than Hippo Holdings. It trades about 0.06 of its potential returns per unit of risk. Hippo Holdings is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 1,938 in Hippo Holdings on August 27, 2024 and sell it today you would earn a total of 1,463 from holding Hippo Holdings or generate 75.49% 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. Hippo Holdings
Performance |
| Timeline |
| MGIC Investment Corp |
| Hippo Holdings |
MGIC Investment and Hippo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Hippo Holdings
The main advantage of trading using opposite MGIC Investment and Hippo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Hippo Holdings 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 Hippo Holdings will offset losses from the drop in Hippo Holdings' long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Hippo Holdings vs. ICC Holdings | Hippo Holdings vs. Employers Holdings | Hippo Holdings vs. AMERISAFE | Hippo Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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