Correlation Between MGIC Investment and Lifevantage
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Lifevantage 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 Lifevantage 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 Lifevantage, you can compare the effects of market volatilities on MGIC Investment and Lifevantage 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 Lifevantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Lifevantage.
Diversification Opportunities for MGIC Investment and Lifevantage
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between MGIC and Lifevantage is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage 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 Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of MGIC Investment i.e., MGIC Investment and Lifevantage go up and down completely randomly.
Pair Corralation between MGIC Investment and Lifevantage
Considering the 90-day investment horizon MGIC Investment is expected to generate 3.06 times less return on investment than Lifevantage. But when comparing it to its historical volatility, MGIC Investment Corp is 3.0 times less risky than Lifevantage. It trades about 0.13 of its potential returns per unit of risk. Lifevantage is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 792.00 in Lifevantage on September 2, 2024 and sell it today you would earn a total of 669.00 from holding Lifevantage or generate 84.47% 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. Lifevantage
Performance |
| Timeline |
| MGIC Investment Corp |
| Lifevantage |
MGIC Investment and Lifevantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Lifevantage
The main advantage of trading using opposite MGIC Investment and Lifevantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Lifevantage 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 Lifevantage will offset losses from the drop in Lifevantage's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings | MGIC Investment vs. James River Group |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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