Correlation Between NYSE Composite and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and MGIC Investment Corp, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and MGIC Investment.
Diversification Opportunities for NYSE Composite and MGIC Investment
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and MGIC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and MGIC Investment go up and down completely randomly.
Pair Corralation between NYSE Composite and MGIC Investment
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.36 times more return on investment than MGIC Investment. However, NYSE Composite is 2.81 times less risky than MGIC Investment. It trades about 0.13 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about -0.02 per unit of risk. If you would invest 1,959,424 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 37,406 from holding NYSE Composite or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. MGIC Investment Corp
Performance |
| Timeline |
NYSE Composite and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
MGIC Investment Corp
Pair trading matchups for MGIC Investment
Pair Trading with NYSE Composite and MGIC Investment
The main advantage of trading using opposite NYSE Composite and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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