Correlation Between Summit Materials and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and MGIC Investment Corp, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and MGIC Investment.
Diversification Opportunities for Summit Materials and MGIC Investment
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and MGIC is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and MGIC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment Corp and Summit Materials 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 Summit Materials 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 Corp has no effect on the direction of Summit Materials i.e., Summit Materials and MGIC Investment go up and down completely randomly.
Pair Corralation between Summit Materials and MGIC Investment
Considering the 90-day investment horizon Summit Materials is expected to generate 1.22 times less return on investment than MGIC Investment. In addition to that, Summit Materials is 1.52 times more volatile than MGIC Investment Corp. It trades about 0.06 of its total potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.11 per unit of volatility. If you would invest 1,534 in MGIC Investment Corp on August 31, 2024 and sell it today you would earn a total of 1,092 from holding MGIC Investment Corp or generate 71.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. MGIC Investment Corp
Performance |
| Timeline |
| Summit Materials |
| MGIC Investment Corp |
Summit Materials and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and MGIC Investment
The main advantage of trading using opposite Summit Materials and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Employers Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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