Correlation Between MGIC Investment and National CineMedia
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and National CineMedia 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 National CineMedia 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 National CineMedia, you can compare the effects of market volatilities on MGIC Investment and National CineMedia 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 National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and National CineMedia.
Diversification Opportunities for MGIC Investment and National CineMedia
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MGIC and National is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of MGIC Investment i.e., MGIC Investment and National CineMedia go up and down completely randomly.
Pair Corralation between MGIC Investment and National CineMedia
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.66 times more return on investment than National CineMedia. However, MGIC Investment Corp is 1.52 times less risky than National CineMedia. It trades about -0.26 of its potential returns per unit of risk. National CineMedia is currently generating about -0.46 per unit of risk. If you would invest 2,455 in MGIC Investment Corp on October 14, 2024 and sell it today you would lose (166.00) from holding MGIC Investment Corp or give up 6.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. National CineMedia
Performance |
| Timeline |
| MGIC Investment Corp |
| National CineMedia |
MGIC Investment and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and National CineMedia
The main advantage of trading using opposite MGIC Investment and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Glory Star New | National CineMedia vs. Impact Fusion International |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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