Correlation Between MGIC Investment and Kingboard Chemical
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Kingboard Chemical 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 Kingboard Chemical 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 Kingboard Chemical Holdings, you can compare the effects of market volatilities on MGIC Investment and Kingboard Chemical 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 Kingboard Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Kingboard Chemical.
Diversification Opportunities for MGIC Investment and Kingboard Chemical
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGIC and Kingboard is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Kingboard Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingboard Chemical 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 Kingboard Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingboard Chemical has no effect on the direction of MGIC Investment i.e., MGIC Investment and Kingboard Chemical go up and down completely randomly.
Pair Corralation between MGIC Investment and Kingboard Chemical
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 1.02 times more return on investment than Kingboard Chemical. However, MGIC Investment is 1.02 times more volatile than Kingboard Chemical Holdings. It trades about 0.1 of its potential returns per unit of risk. Kingboard Chemical Holdings is currently generating about -0.02 per unit of risk. If you would invest 1,340 in MGIC Investment Corp on November 5, 2024 and sell it today you would earn a total of 1,214 from holding MGIC Investment Corp or generate 90.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Kingboard Chemical Holdings
Performance |
| Timeline |
| MGIC Investment Corp |
| Kingboard Chemical |
MGIC Investment and Kingboard Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Kingboard Chemical
The main advantage of trading using opposite MGIC Investment and Kingboard Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Kingboard Chemical 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 Kingboard Chemical will offset losses from the drop in Kingboard Chemical's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Kingboard Chemical vs. Saia Inc | Kingboard Chemical vs. Broadcom | Kingboard Chemical vs. Proficient Auto Logistics, | Kingboard Chemical vs. Globalfoundries |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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