Correlation Between Wendys and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Wendys 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 Wendys and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Wendys Co and MGIC Investment Corp, you can compare the effects of market volatilities on Wendys 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 Wendys with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendys and MGIC Investment.
Diversification Opportunities for Wendys and MGIC Investment
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wendys and MGIC is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co 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 Wendys 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 The Wendys Co 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 Wendys i.e., Wendys and MGIC Investment go up and down completely randomly.
Pair Corralation between Wendys and MGIC Investment
Considering the 90-day investment horizon The Wendys Co is expected to under-perform the MGIC Investment. In addition to that, Wendys is 1.23 times more volatile than MGIC Investment Corp. It trades about -0.19 of its total potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.4 per unit of volatility. If you would invest 2,344 in MGIC Investment Corp on September 2, 2024 and sell it today you would earn a total of 282.00 from holding MGIC Investment Corp or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Wendys Co vs. MGIC Investment Corp
Performance |
| Timeline |
| The Wendys |
| MGIC Investment Corp |
Wendys and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wendys and MGIC Investment
The main advantage of trading using opposite Wendys and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys 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.| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings | MGIC Investment vs. James River Group |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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