Correlation Between United Utilities and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both United Utilities 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 United Utilities and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Utilities Group and MGIC INVESTMENT, you can compare the effects of market volatilities on United Utilities 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 United Utilities with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and MGIC INVESTMENT.
Diversification Opportunities for United Utilities and MGIC INVESTMENT
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and MGIC is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and United Utilities 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 United Utilities Group 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 United Utilities i.e., United Utilities and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between United Utilities and MGIC INVESTMENT
Assuming the 90 days trading horizon United Utilities Group is expected to generate 0.81 times more return on investment than MGIC INVESTMENT. However, United Utilities Group is 1.24 times less risky than MGIC INVESTMENT. It trades about 0.36 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.19 per unit of risk. If you would invest 1,204 in United Utilities Group on September 2, 2024 and sell it today you would earn a total of 146.00 from holding United Utilities Group or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. MGIC INVESTMENT
Performance |
| Timeline |
| United Utilities |
| MGIC INVESTMENT |
United Utilities and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and MGIC INVESTMENT
The main advantage of trading using opposite United Utilities and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities 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.| United Utilities vs. Guangdong Investment Limited | United Utilities vs. Superior Plus Corp | United Utilities vs. NMI Holdings | United Utilities vs. Origin Agritech |
| MGIC INVESTMENT vs. SIVERS SEMICONDUCTORS AB | MGIC INVESTMENT vs. Darden Restaurants | MGIC INVESTMENT vs. Reliance Steel Aluminum | MGIC INVESTMENT vs. Q2M Managementberatung AG |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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