Correlation Between PROSIEBENSAT1 MEDIADR4/ and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and MGIC INVESTMENT, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and MGIC INVESTMENT.
Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and MGIC INVESTMENT
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PROSIEBENSAT1 and MGIC is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 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 has no effect on the direction of PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and MGIC INVESTMENT
Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to generate 3.06 times more return on investment than MGIC INVESTMENT. However, PROSIEBENSAT1 MEDIADR4/ is 3.06 times more volatile than MGIC INVESTMENT. It trades about 0.09 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.01 per unit of risk. If you would invest 124.00 in PROSIEBENSAT1 MEDIADR4 on September 13, 2024 and sell it today you would earn a total of 8.00 from holding PROSIEBENSAT1 MEDIADR4 or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PROSIEBENSAT1 MEDIADR4 vs. MGIC INVESTMENT
Performance |
| Timeline |
| PROSIEBENSAT1 MEDIADR4/ |
| MGIC INVESTMENT |
PROSIEBENSAT1 MEDIADR4/ and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROSIEBENSAT1 MEDIADR4/ and MGIC INVESTMENT
The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ 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.| PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc |
| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc |
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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