Correlation Between Universal Entertainment and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Universal Entertainment 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 Universal Entertainment and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Entertainment and MGIC INVESTMENT, you can compare the effects of market volatilities on Universal Entertainment 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 Universal Entertainment with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and MGIC INVESTMENT.
Diversification Opportunities for Universal Entertainment and MGIC INVESTMENT
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and MGIC is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment i.e., Universal Entertainment and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Universal Entertainment and MGIC INVESTMENT
Assuming the 90 days trading horizon Universal Entertainment is expected to under-perform the MGIC INVESTMENT. In addition to that, Universal Entertainment is 4.41 times more volatile than MGIC INVESTMENT. It trades about -0.11 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.01 per unit of volatility. If you would invest 2,340 in MGIC INVESTMENT on September 14, 2024 and sell it today you would earn a total of 0.00 from holding MGIC INVESTMENT or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Entertainment vs. MGIC INVESTMENT
Performance |
| Timeline |
| Universal Entertainment |
| MGIC INVESTMENT |
Universal Entertainment and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Entertainment and MGIC INVESTMENT
The main advantage of trading using opposite Universal Entertainment and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Entertainment 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.| Universal Entertainment vs. HF FOODS GRP | Universal Entertainment vs. NetSol Technologies | Universal Entertainment vs. Charoen Pokphand Foods | Universal Entertainment vs. SOFI TECHNOLOGIES |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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