Correlation Between Trupanion and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Trupanion 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 Trupanion and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trupanion and MGIC Investment Corp, you can compare the effects of market volatilities on Trupanion 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 Trupanion with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trupanion and MGIC Investment.
Diversification Opportunities for Trupanion and MGIC Investment
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Trupanion and MGIC is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Trupanion 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 Trupanion 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 Trupanion 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 Trupanion i.e., Trupanion and MGIC Investment go up and down completely randomly.
Pair Corralation between Trupanion and MGIC Investment
Given the investment horizon of 90 days Trupanion is expected to under-perform the MGIC Investment. In addition to that, Trupanion is 1.64 times more volatile than MGIC Investment Corp. It trades about -0.01 of its total potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.06 per unit of volatility. If you would invest 2,503 in MGIC Investment Corp on August 27, 2024 and sell it today you would earn a total of 47.00 from holding MGIC Investment Corp or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trupanion vs. MGIC Investment Corp
Performance |
| Timeline |
| Trupanion |
| MGIC Investment Corp |
Trupanion and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trupanion and MGIC Investment
The main advantage of trading using opposite Trupanion and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trupanion 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.| Trupanion vs. First American | Trupanion vs. Assurant | Trupanion vs. NMI Holdings | Trupanion vs. MGIC Investment Corp |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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