Correlation Between SINGAPORE AIRLINES and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both SINGAPORE AIRLINES 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 SINGAPORE AIRLINES and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SINGAPORE AIRLINES and MGIC INVESTMENT, you can compare the effects of market volatilities on SINGAPORE AIRLINES 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 SINGAPORE AIRLINES with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINGAPORE AIRLINES and MGIC INVESTMENT.
Diversification Opportunities for SINGAPORE AIRLINES and MGIC INVESTMENT
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between SINGAPORE and MGIC is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SINGAPORE AIRLINES and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES 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 SINGAPORE AIRLINES i.e., SINGAPORE AIRLINES and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between SINGAPORE AIRLINES and MGIC INVESTMENT
Assuming the 90 days trading horizon SINGAPORE AIRLINES is expected to generate 2.42 times less return on investment than MGIC INVESTMENT. In addition to that, SINGAPORE AIRLINES is 1.01 times more volatile than MGIC INVESTMENT. It trades about 0.05 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.12 per unit of volatility. If you would invest 1,223 in MGIC INVESTMENT on November 1, 2024 and sell it today you would earn a total of 1,217 from holding MGIC INVESTMENT or generate 99.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SINGAPORE AIRLINES vs. MGIC INVESTMENT
Performance |
| Timeline |
| SINGAPORE AIRLINES |
| MGIC INVESTMENT |
SINGAPORE AIRLINES and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SINGAPORE AIRLINES and MGIC INVESTMENT
The main advantage of trading using opposite SINGAPORE AIRLINES and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SINGAPORE AIRLINES 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.| SINGAPORE AIRLINES vs. EPSILON HEALTHCARE LTD | SINGAPORE AIRLINES vs. Yuexiu Transport Infrastructure | SINGAPORE AIRLINES vs. Columbia Sportswear | SINGAPORE AIRLINES vs. WESANA HEALTH HOLD |
| 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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