Correlation Between MGIC Investment and Radian
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Radian 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 Radian 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 Radian Group, you can compare the effects of market volatilities on MGIC Investment and Radian 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 Radian. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Radian.
Diversification Opportunities for MGIC Investment and Radian
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MGIC and Radian is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Radian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radian Group 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 Radian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radian Group has no effect on the direction of MGIC Investment i.e., MGIC Investment and Radian go up and down completely randomly.
Pair Corralation between MGIC Investment and Radian
Considering the 90-day investment horizon MGIC Investment Corp is expected to under-perform the Radian. But the stock apears to be less risky and, when comparing its historical volatility, MGIC Investment Corp is 1.52 times less risky than Radian. The stock trades about -0.02 of its potential returns per unit of risk. The Radian Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,429 in Radian Group on August 24, 2024 and sell it today you would lose (27.00) from holding Radian Group or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Radian Group
Performance |
| Timeline |
| MGIC Investment Corp |
| Radian Group |
MGIC Investment and Radian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Radian
The main advantage of trading using opposite MGIC Investment and Radian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Radian 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 Radian will offset losses from the drop in Radian's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |