Correlation Between MGIC Investment and 29364WBL1

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Can any of the company-specific risk be diversified away by investing in both MGIC Investment and 29364WBL1 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 29364WBL1 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 ETR 475 15 SEP 52, you can compare the effects of market volatilities on MGIC Investment and 29364WBL1 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 29364WBL1. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and 29364WBL1.

Diversification Opportunities for MGIC Investment and 29364WBL1

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between MGIC and 29364WBL1 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and ETR 475 15 SEP 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETR 475 15 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 29364WBL1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETR 475 15 has no effect on the direction of MGIC Investment i.e., MGIC Investment and 29364WBL1 go up and down completely randomly.

Pair Corralation between MGIC Investment and 29364WBL1

Considering the 90-day investment horizon MGIC Investment Corp is expected to under-perform the 29364WBL1. But the stock apears to be less risky and, when comparing its historical volatility, MGIC Investment Corp is 1.5 times less risky than 29364WBL1. The stock trades about -0.04 of its potential returns per unit of risk. The ETR 475 15 SEP 52 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,882  in ETR 475 15 SEP 52 on September 12, 2024 and sell it today you would earn a total of  284.00  from holding ETR 475 15 SEP 52 or generate 3.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy85.71%
ValuesDaily Returns

MGIC Investment Corp  vs.  ETR 475 15 SEP 52

 Performance 
       Timeline  
MGIC Investment Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days MGIC Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MGIC Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
ETR 475 15 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ETR 475 15 SEP 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 29364WBL1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MGIC Investment and 29364WBL1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MGIC Investment and 29364WBL1

The main advantage of trading using opposite MGIC Investment and 29364WBL1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, 29364WBL1 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 29364WBL1 will offset losses from the drop in 29364WBL1's long position.
The idea behind MGIC Investment Corp and ETR 475 15 SEP 52 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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