Correlation Between MGIC Investment and Sun Life
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Sun Life 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 Sun Life 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 Sun Life Financial, you can compare the effects of market volatilities on MGIC Investment and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Sun Life.
Diversification Opportunities for MGIC Investment and Sun Life
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MGIC and Sun is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of MGIC Investment i.e., MGIC Investment and Sun Life go up and down completely randomly.
Pair Corralation between MGIC Investment and Sun Life
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 1.33 times more return on investment than Sun Life. However, MGIC Investment is 1.33 times more volatile than Sun Life Financial. It trades about 0.11 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.06 per unit of risk. If you would invest 1,312 in MGIC Investment Corp on August 27, 2024 and sell it today you would earn a total of 1,238 from holding MGIC Investment Corp or generate 94.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Sun Life Financial
Performance |
| Timeline |
| MGIC Investment Corp |
| Sun Life Financial |
MGIC Investment and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Sun Life
The main advantage of trading using opposite MGIC Investment and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Sun Life vs. Axa Equitable Holdings | Sun Life vs. American International Group | Sun Life vs. Arch Capital Group | Sun Life vs. Old Republic 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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