Correlation Between Silicon Motion and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Silicon Motion 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 Silicon Motion and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Motion Technology and MGIC INVESTMENT, you can compare the effects of market volatilities on Silicon Motion 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 Silicon Motion with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and MGIC INVESTMENT.
Diversification Opportunities for Silicon Motion and MGIC INVESTMENT
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silicon and MGIC is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and Silicon Motion 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 Silicon Motion Technology 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 Silicon Motion i.e., Silicon Motion and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Silicon Motion and MGIC INVESTMENT
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 2.8 times more return on investment than MGIC INVESTMENT. However, Silicon Motion is 2.8 times more volatile than MGIC INVESTMENT. It trades about -0.02 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about -0.12 per unit of risk. If you would invest 5,350 in Silicon Motion Technology on October 13, 2024 and sell it today you would lose (100.00) from holding Silicon Motion Technology or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. MGIC INVESTMENT
Performance |
| Timeline |
| Silicon Motion Technology |
| MGIC INVESTMENT |
Silicon Motion and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and MGIC INVESTMENT
The main advantage of trading using opposite Silicon Motion and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion 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.| Silicon Motion vs. ONWARD MEDICAL BV | Silicon Motion vs. INDOFOOD AGRI RES | Silicon Motion vs. TYSON FOODS A | Silicon Motion vs. Lifeway Foods |
| MGIC INVESTMENT vs. MHP Hotel AG | MGIC INVESTMENT vs. InterContinental Hotels Group | MGIC INVESTMENT vs. The Boston Beer | MGIC INVESTMENT vs. DALATA HOTEL |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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