Correlation Between Sterling Construction and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Sterling Construction 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 Sterling Construction and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and MGIC INVESTMENT, you can compare the effects of market volatilities on Sterling Construction 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 Sterling Construction with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and MGIC INVESTMENT.
Diversification Opportunities for Sterling Construction and MGIC INVESTMENT
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sterling and MGIC is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and Sterling Construction 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 Sterling Construction 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 Sterling Construction i.e., Sterling Construction and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Sterling Construction and MGIC INVESTMENT
Assuming the 90 days horizon Sterling Construction is expected to generate 2.07 times more return on investment than MGIC INVESTMENT. However, Sterling Construction is 2.07 times more volatile than MGIC INVESTMENT. It trades about 0.05 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.07 per unit of risk. If you would invest 17,160 in Sterling Construction on September 15, 2024 and sell it today you would earn a total of 350.00 from holding Sterling Construction or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. MGIC INVESTMENT
Performance |
| Timeline |
| Sterling Construction |
| MGIC INVESTMENT |
Sterling Construction and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and MGIC INVESTMENT
The main advantage of trading using opposite Sterling Construction and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction 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.| Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. SIVERS SEMICONDUCTORS AB | Sterling Construction vs. Norsk Hydro ASA | Sterling Construction vs. Reliance Steel Aluminum |
| MGIC INVESTMENT vs. Sterling Construction | MGIC INVESTMENT vs. Singapore Reinsurance | MGIC INVESTMENT vs. REVO INSURANCE SPA | MGIC INVESTMENT vs. Universal Insurance 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |