Correlation Between MGIC Investment and Verra Mobility
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Verra Mobility 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 Verra Mobility 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 Verra Mobility Corp, you can compare the effects of market volatilities on MGIC Investment and Verra Mobility 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 Verra Mobility. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Verra Mobility.
Diversification Opportunities for MGIC Investment and Verra Mobility
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and Verra is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Verra Mobility Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verra Mobility Corp 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 Verra Mobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verra Mobility Corp has no effect on the direction of MGIC Investment i.e., MGIC Investment and Verra Mobility go up and down completely randomly.
Pair Corralation between MGIC Investment and Verra Mobility
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.8 times more return on investment than Verra Mobility. However, MGIC Investment Corp is 1.25 times less risky than Verra Mobility. It trades about 0.12 of its potential returns per unit of risk. Verra Mobility Corp is currently generating about 0.05 per unit of risk. If you would invest 1,622 in MGIC Investment Corp on August 25, 2024 and sell it today you would earn a total of 928.00 from holding MGIC Investment Corp or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Verra Mobility Corp
Performance |
| Timeline |
| MGIC Investment Corp |
| Verra Mobility Corp |
MGIC Investment and Verra Mobility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Verra Mobility
The main advantage of trading using opposite MGIC Investment and Verra Mobility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Verra Mobility 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 Verra Mobility will offset losses from the drop in Verra Mobility's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Verra Mobility vs. International Money Express | Verra Mobility vs. Option Care Health | Verra Mobility vs. R1 RCM Inc | Verra Mobility vs. Aquagold 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 CEOs Directory module to screen CEOs from public companies around the world.
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