Correlation Between MGIC Investment and Western Asset
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Western Asset 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 Western Asset 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 Western Asset Investment, you can compare the effects of market volatilities on MGIC Investment and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Western Asset.
Diversification Opportunities for MGIC Investment and Western Asset
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and Western is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Western Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Investment 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Investment has no effect on the direction of MGIC Investment i.e., MGIC Investment and Western Asset go up and down completely randomly.
Pair Corralation between MGIC Investment and Western Asset
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 2.28 times more return on investment than Western Asset. However, MGIC Investment is 2.28 times more volatile than Western Asset Investment. It trades about 0.1 of its potential returns per unit of risk. Western Asset Investment is currently generating about 0.04 per unit of risk. If you would invest 1,319 in MGIC Investment Corp on November 19, 2024 and sell it today you would earn a total of 1,150 from holding MGIC Investment Corp or generate 87.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
MGIC Investment Corp vs. Western Asset Investment
Performance |
| Timeline |
| MGIC Investment Corp |
| Western Asset Investment |
MGIC Investment and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Western Asset
The main advantage of trading using opposite MGIC Investment and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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