Correlation Between MGIC Investment and Modine Manufacturing
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Modine Manufacturing 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 Modine Manufacturing 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 Modine Manufacturing, you can compare the effects of market volatilities on MGIC Investment and Modine Manufacturing 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 Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Modine Manufacturing.
Diversification Opportunities for MGIC Investment and Modine Manufacturing
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and Modine is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing 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 Modine Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modine Manufacturing has no effect on the direction of MGIC Investment i.e., MGIC Investment and Modine Manufacturing go up and down completely randomly.
Pair Corralation between MGIC Investment and Modine Manufacturing
Considering the 90-day investment horizon MGIC Investment is expected to generate 10.12 times less return on investment than Modine Manufacturing. But when comparing it to its historical volatility, MGIC Investment Corp is 2.31 times less risky than Modine Manufacturing. It trades about 0.03 of its potential returns per unit of risk. Modine Manufacturing is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 12,828 in Modine Manufacturing on August 24, 2024 and sell it today you would earn a total of 1,501 from holding Modine Manufacturing or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Modine Manufacturing
Performance |
| Timeline |
| MGIC Investment Corp |
| Modine Manufacturing |
MGIC Investment and Modine Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Modine Manufacturing
The main advantage of trading using opposite MGIC Investment and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Modine Manufacturing 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 Modine Manufacturing will offset losses from the drop in Modine Manufacturing's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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