Correlation Between MGIC Investment and Take Two
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Take Two 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 Take Two 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 Take Two Interactive Software, you can compare the effects of market volatilities on MGIC Investment and Take Two 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 Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Take Two.
Diversification Opportunities for MGIC Investment and Take Two
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MGIC and Take is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of MGIC Investment i.e., MGIC Investment and Take Two go up and down completely randomly.
Pair Corralation between MGIC Investment and Take Two
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.83 times more return on investment than Take Two. However, MGIC Investment Corp is 1.21 times less risky than Take Two. It trades about 0.26 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about -0.05 per unit of risk. If you would invest 2,343 in MGIC Investment Corp on November 5, 2024 and sell it today you would earn a total of 168.00 from holding MGIC Investment Corp or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Take Two Interactive Software
Performance |
| Timeline |
| MGIC Investment Corp |
| Take Two Interactive |
MGIC Investment and Take Two Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Take Two
The main advantage of trading using opposite MGIC Investment and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Take Two 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 Take Two will offset losses from the drop in Take Two's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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