Correlation Between SHIN ETSU and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both SHIN ETSU 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 SHIN ETSU and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIN ETSU CHEMICAL and MGIC INVESTMENT, you can compare the effects of market volatilities on SHIN ETSU 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 SHIN ETSU with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN ETSU and MGIC INVESTMENT.
Diversification Opportunities for SHIN ETSU and MGIC INVESTMENT
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between SHIN and MGIC is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and SHIN ETSU 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 SHIN ETSU CHEMICAL 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 SHIN ETSU i.e., SHIN ETSU and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between SHIN ETSU and MGIC INVESTMENT
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the MGIC INVESTMENT. In addition to that, SHIN ETSU is 1.28 times more volatile than MGIC INVESTMENT. It trades about -0.31 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about -0.23 per unit of volatility. If you would invest 2,440 in MGIC INVESTMENT on September 24, 2024 and sell it today you would lose (160.00) from holding MGIC INVESTMENT or give up 6.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. MGIC INVESTMENT
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| MGIC INVESTMENT |
SHIN ETSU and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN ETSU and MGIC INVESTMENT
The main advantage of trading using opposite SHIN ETSU and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN ETSU 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.| SHIN ETSU vs. Lendlease Group | SHIN ETSU vs. LION ONE METALS | SHIN ETSU vs. United Rentals | SHIN ETSU vs. TELES Informationstechnologien AG |
| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Microsoft |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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