Correlation Between MGIC Investment and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Jacobs Solutions 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 Jacobs Solutions 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 Jacobs Solutions, you can compare the effects of market volatilities on MGIC Investment and Jacobs Solutions 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 Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Jacobs Solutions.
Diversification Opportunities for MGIC Investment and Jacobs Solutions
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MGIC and Jacobs is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions 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 Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of MGIC Investment i.e., MGIC Investment and Jacobs Solutions go up and down completely randomly.
Pair Corralation between MGIC Investment and Jacobs Solutions
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.9 times more return on investment than Jacobs Solutions. However, MGIC Investment Corp is 1.11 times less risky than Jacobs Solutions. It trades about 0.13 of its potential returns per unit of risk. Jacobs Solutions is currently generating about -0.02 per unit of risk. If you would invest 2,503 in MGIC Investment Corp on August 27, 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Jacobs Solutions
Performance |
| Timeline |
| MGIC Investment Corp |
| Jacobs Solutions |
MGIC Investment and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Jacobs Solutions
The main advantage of trading using opposite MGIC Investment and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Jacobs Solutions 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 Jacobs Solutions will offset losses from the drop in Jacobs Solutions' long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Jacobs Solutions vs. Innovate Corp | Jacobs Solutions vs. Energy Services | Jacobs Solutions vs. Api Group Corp | Jacobs Solutions vs. Topbuild Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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