Correlation Between Shenandoah Telecommunicatio and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenandoah Telecommunications and MGIC INVESTMENT, you can compare the effects of market volatilities on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and MGIC INVESTMENT.
Diversification Opportunities for Shenandoah Telecommunicatio and MGIC INVESTMENT
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shenandoah and MGIC is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Shenandoah Telecommunicatio and MGIC INVESTMENT
Assuming the 90 days horizon Shenandoah Telecommunications is expected to generate 2.72 times more return on investment than MGIC INVESTMENT. However, Shenandoah Telecommunicatio is 2.72 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 1,220 in Shenandoah Telecommunications on September 14, 2024 and sell it today you would earn a total of 70.00 from holding Shenandoah Telecommunications or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenandoah Telecommunications vs. MGIC INVESTMENT
Performance |
| Timeline |
| Shenandoah Telecommunicatio |
| MGIC INVESTMENT |
Shenandoah Telecommunicatio and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenandoah Telecommunicatio and MGIC INVESTMENT
The main advantage of trading using opposite Shenandoah Telecommunicatio and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenandoah Telecommunicatio 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.The idea behind Shenandoah Telecommunications and MGIC INVESTMENT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges |