Correlation Between MGIC Investment and Wendys
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Wendys 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 Wendys 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 The Wendys Co, you can compare the effects of market volatilities on MGIC Investment and Wendys 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 Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Wendys.
Diversification Opportunities for MGIC Investment and Wendys
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between MGIC and Wendys is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys 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 Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of MGIC Investment i.e., MGIC Investment and Wendys go up and down completely randomly.
Pair Corralation between MGIC Investment and Wendys
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.9 times more return on investment than Wendys. However, MGIC Investment Corp is 1.11 times less risky than Wendys. It trades about 0.12 of its potential returns per unit of risk. The Wendys Co is currently generating about 0.01 per unit of risk. If you would invest 1,736 in MGIC Investment Corp on September 2, 2024 and sell it today you would earn a total of 890.00 from holding MGIC Investment Corp or generate 51.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. The Wendys Co
Performance |
| Timeline |
| MGIC Investment Corp |
| The Wendys |
MGIC Investment and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Wendys
The main advantage of trading using opposite MGIC Investment and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings | MGIC Investment vs. James River Group |
| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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