Correlation Between MGIC Investment and RJK Explorations
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and RJK Explorations 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 RJK Explorations 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 RJK Explorations, you can compare the effects of market volatilities on MGIC Investment and RJK Explorations 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 RJK Explorations. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and RJK Explorations.
Diversification Opportunities for MGIC Investment and RJK Explorations
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGIC and RJK is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and RJK Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RJK Explorations 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 RJK Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RJK Explorations has no effect on the direction of MGIC Investment i.e., MGIC Investment and RJK Explorations go up and down completely randomly.
Pair Corralation between MGIC Investment and RJK Explorations
Considering the 90-day investment horizon MGIC Investment is expected to generate 22.95 times less return on investment than RJK Explorations. But when comparing it to its historical volatility, MGIC Investment Corp is 18.59 times less risky than RJK Explorations. It trades about 0.08 of its potential returns per unit of risk. RJK Explorations is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4.50 in RJK Explorations on September 14, 2024 and sell it today you would earn a total of 0.50 from holding RJK Explorations or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
MGIC Investment Corp vs. RJK Explorations
Performance |
| Timeline |
| MGIC Investment Corp |
| RJK Explorations |
MGIC Investment and RJK Explorations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and RJK Explorations
The main advantage of trading using opposite MGIC Investment and RJK Explorations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, RJK Explorations 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 RJK Explorations will offset losses from the drop in RJK Explorations' long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| RJK Explorations vs. Gold79 Mines | RJK Explorations vs. Arctic Star Exploration | RJK Explorations vs. Arras Minerals Corp | RJK Explorations vs. American Creek Resources |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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