Correlation Between NETGEAR and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both NETGEAR and MGIC Investment 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 NETGEAR and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and MGIC Investment Corp, you can compare the effects of market volatilities on NETGEAR and MGIC Investment 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 NETGEAR with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and MGIC Investment.
Diversification Opportunities for NETGEAR and MGIC Investment
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between NETGEAR and MGIC is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and MGIC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment Corp and NETGEAR 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 NETGEAR are associated (or correlated) with MGIC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC Investment Corp has no effect on the direction of NETGEAR i.e., NETGEAR and MGIC Investment go up and down completely randomly.
Pair Corralation between NETGEAR and MGIC Investment
Given the investment horizon of 90 days NETGEAR is expected to generate 1.13 times more return on investment than MGIC Investment. However, NETGEAR is 1.13 times more volatile than MGIC Investment Corp. It trades about 0.33 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.1 per unit of risk. If you would invest 2,044 in NETGEAR on August 30, 2024 and sell it today you would earn a total of 360.00 from holding NETGEAR or generate 17.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NETGEAR vs. MGIC Investment Corp
Performance |
| Timeline |
| NETGEAR |
| MGIC Investment Corp |
NETGEAR and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and MGIC Investment
The main advantage of trading using opposite NETGEAR and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, MGIC Investment 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 MGIC Investment will offset losses from the drop in MGIC Investment's long position.| NETGEAR vs. Cambium Networks Corp | NETGEAR vs. KVH Industries | NETGEAR vs. Knowles Cor | NETGEAR vs. AudioCodes |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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