Correlation Between MGIC Investment and ICC Holdings
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and ICC 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 ICC 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 ICC Holdings, you can compare the effects of market volatilities on MGIC Investment and ICC 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 ICC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and ICC Holdings.
Diversification Opportunities for MGIC Investment and ICC Holdings
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between MGIC and ICC is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and ICC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC 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 ICC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC Holdings has no effect on the direction of MGIC Investment i.e., MGIC Investment and ICC Holdings go up and down completely randomly.
Pair Corralation between MGIC Investment and ICC Holdings
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 5.07 times more return on investment than ICC Holdings. However, MGIC Investment is 5.07 times more volatile than ICC Holdings. It trades about 0.13 of its potential returns per unit of risk. ICC Holdings is currently generating about 0.08 per unit of risk. If you would invest 2,503 in MGIC Investment Corp on August 28, 2024 and sell it today you would earn a total of 130.00 from holding MGIC Investment Corp or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
MGIC Investment Corp vs. ICC Holdings
Performance |
| Timeline |
| MGIC Investment Corp |
| ICC Holdings |
MGIC Investment and ICC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and ICC Holdings
The main advantage of trading using opposite MGIC Investment and ICC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, ICC 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 ICC Holdings will offset losses from the drop in ICC Holdings' long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| ICC Holdings vs. Employers Holdings | ICC Holdings vs. AMERISAFE | ICC Holdings vs. NMI Holdings | ICC Holdings vs. Investors Title |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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