Correlation Between CHEMICAL INDUSTRIES and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHEMICAL INDUSTRIES and MGIC INVESTMENT, you can compare the effects of market volatilities on CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEMICAL INDUSTRIES and MGIC INVESTMENT.
Diversification Opportunities for CHEMICAL INDUSTRIES and MGIC INVESTMENT
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHEMICAL and MGIC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHEMICAL INDUSTRIES and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES i.e., CHEMICAL INDUSTRIES and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between CHEMICAL INDUSTRIES and MGIC INVESTMENT
Assuming the 90 days trading horizon CHEMICAL INDUSTRIES is expected to generate 9.68 times less return on investment than MGIC INVESTMENT. But when comparing it to its historical volatility, CHEMICAL INDUSTRIES is 5.04 times less risky than MGIC INVESTMENT. It trades about 0.06 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,157 in MGIC INVESTMENT on September 24, 2024 and sell it today you would earn a total of 1,123 from holding MGIC INVESTMENT or generate 97.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.61% |
| Values | Daily Returns |
CHEMICAL INDUSTRIES vs. MGIC INVESTMENT
Performance |
| Timeline |
| CHEMICAL INDUSTRIES |
| MGIC INVESTMENT |
CHEMICAL INDUSTRIES and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHEMICAL INDUSTRIES and MGIC INVESTMENT
The main advantage of trading using opposite CHEMICAL INDUSTRIES and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEMICAL INDUSTRIES 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.| CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Microsoft |
| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Microsoft |
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 CEOs Directory module to screen CEOs from public companies around the world.
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