Correlation Between MGIC Investment and CBOE Volatility
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and CBOE Volatility 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 CBOE Volatility 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 CBOE Volatility Index, you can compare the effects of market volatilities on MGIC Investment and CBOE Volatility 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 CBOE Volatility. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and CBOE Volatility.
Diversification Opportunities for MGIC Investment and CBOE Volatility
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGIC and CBOE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and CBOE Volatility Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBOE Volatility Index 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 CBOE Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBOE Volatility Index has no effect on the direction of MGIC Investment i.e., MGIC Investment and CBOE Volatility go up and down completely randomly.
Pair Corralation between MGIC Investment and CBOE Volatility
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.21 times more return on investment than CBOE Volatility. However, MGIC Investment Corp is 4.73 times less risky than CBOE Volatility. It trades about 0.11 of its potential returns per unit of risk. CBOE Volatility Index is currently generating about 0.01 per unit of risk. If you would invest 1,259 in MGIC Investment Corp on September 1, 2024 and sell it today you would earn a total of 1,367 from holding MGIC Investment Corp or generate 108.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.3% |
| Values | Daily Returns |
MGIC Investment Corp vs. CBOE Volatility Index
Performance |
| Timeline |
MGIC Investment and CBOE Volatility Volatility Contrast
Predicted Return Density |
| Returns |
MGIC Investment Corp
Pair trading matchups for MGIC Investment
CBOE Volatility Index
Pair trading matchups for CBOE Volatility
Pair Trading with MGIC Investment and CBOE Volatility
The main advantage of trading using opposite MGIC Investment and CBOE Volatility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, CBOE Volatility 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 CBOE Volatility will offset losses from the drop in CBOE Volatility's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings |
| CBOE Volatility vs. Maiden Holdings | CBOE Volatility vs. MGIC Investment Corp | CBOE Volatility vs. Contagious Gaming | CBOE Volatility vs. Northstar Clean Technologies |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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