Correlation Between Tarsus Pharmaceuticals and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tarsus Pharmaceuticals and MGIC Investment Corp, you can compare the effects of market volatilities on Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tarsus Pharmaceuticals and MGIC Investment.
Diversification Opportunities for Tarsus Pharmaceuticals and MGIC Investment
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tarsus and MGIC is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals 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 Tarsus Pharmaceuticals i.e., Tarsus Pharmaceuticals and MGIC Investment go up and down completely randomly.
Pair Corralation between Tarsus Pharmaceuticals and MGIC Investment
Given the investment horizon of 90 days Tarsus Pharmaceuticals is expected to generate 1.92 times more return on investment than MGIC Investment. However, Tarsus Pharmaceuticals is 1.92 times more volatile than MGIC Investment Corp. It trades about 0.28 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.06 per unit of risk. If you would invest 3,967 in Tarsus Pharmaceuticals on August 27, 2024 and sell it today you would earn a total of 857.00 from holding Tarsus Pharmaceuticals or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tarsus Pharmaceuticals vs. MGIC Investment Corp
Performance |
| Timeline |
| Tarsus Pharmaceuticals |
| MGIC Investment Corp |
Tarsus Pharmaceuticals and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tarsus Pharmaceuticals and MGIC Investment
The main advantage of trading using opposite Tarsus Pharmaceuticals and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tarsus Pharmaceuticals 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.| Tarsus Pharmaceuticals vs. Aldeyra | Tarsus Pharmaceuticals vs. Travere Therapeutics | Tarsus Pharmaceuticals vs. Eton Pharmaceuticals | Tarsus Pharmaceuticals vs. Connect Biopharma Holdings |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Assured Guaranty | 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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