Correlation Between MGIC Investment and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Natural Alternatives 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 Natural Alternatives 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 Natural Alternatives International, you can compare the effects of market volatilities on MGIC Investment and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Natural Alternatives.
Diversification Opportunities for MGIC Investment and Natural Alternatives
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and Natural is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of MGIC Investment i.e., MGIC Investment and Natural Alternatives go up and down completely randomly.
Pair Corralation between MGIC Investment and Natural Alternatives
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.66 times more return on investment than Natural Alternatives. However, MGIC Investment Corp is 1.53 times less risky than Natural Alternatives. It trades about -0.15 of its potential returns per unit of risk. Natural Alternatives International is currently generating about -0.18 per unit of risk. If you would invest 2,557 in MGIC Investment Corp on December 1, 2024 and sell it today you would lose (96.00) from holding MGIC Investment Corp or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Natural Alternatives Internati
Performance |
| Timeline |
| MGIC Investment Corp |
| Natural Alternatives |
MGIC Investment and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Natural Alternatives
The main advantage of trading using opposite MGIC Investment and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Natural Alternatives vs. FitLife Brands, Common | Natural Alternatives vs. Lifeway Foods | Natural Alternatives vs. Else Nutrition Holdings | Natural Alternatives vs. Central Garden Pet |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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