Correlation Between MGIC Investment and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both MGIC Investment and Willamette Valley 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 Willamette Valley 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 Willamette Valley Vineyards, you can compare the effects of market volatilities on MGIC Investment and Willamette Valley 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 Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and Willamette Valley.
Diversification Opportunities for MGIC Investment and Willamette Valley
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MGIC and Willamette is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of MGIC Investment i.e., MGIC Investment and Willamette Valley go up and down completely randomly.
Pair Corralation between MGIC Investment and Willamette Valley
Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.59 times more return on investment than Willamette Valley. However, MGIC Investment Corp is 1.7 times less risky than Willamette Valley. It trades about 0.11 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.07 per unit of risk. If you would invest 2,046 in MGIC Investment Corp on September 3, 2024 and sell it today you would earn a total of 580.00 from holding MGIC Investment Corp or generate 28.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC Investment Corp vs. Willamette Valley Vineyards
Performance |
| Timeline |
| MGIC Investment Corp |
| Willamette Valley |
MGIC Investment and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC Investment and Willamette Valley
The main advantage of trading using opposite MGIC Investment and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, Willamette Valley 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 Willamette Valley will offset losses from the drop in Willamette Valley's long position.| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Andrew Peller Limited | Willamette Valley vs. Iconic Brands | Willamette Valley vs. Naked Wines plc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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