Correlation Between ON SEMICONDUCTOR and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both ON SEMICONDUCTOR 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 ON SEMICONDUCTOR and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ON SEMICONDUCTOR and MGIC INVESTMENT, you can compare the effects of market volatilities on ON SEMICONDUCTOR 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 ON SEMICONDUCTOR with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of ON SEMICONDUCTOR and MGIC INVESTMENT.
Diversification Opportunities for ON SEMICONDUCTOR and MGIC INVESTMENT
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between XS4 and MGIC is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ON SEMICONDUCTOR and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 ON SEMICONDUCTOR i.e., ON SEMICONDUCTOR and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between ON SEMICONDUCTOR and MGIC INVESTMENT
Assuming the 90 days trading horizon ON SEMICONDUCTOR is expected to generate 18.1 times less return on investment than MGIC INVESTMENT. In addition to that, ON SEMICONDUCTOR is 1.25 times more volatile than MGIC INVESTMENT. It trades about 0.01 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.2 per unit of volatility. If you would invest 2,307 in MGIC INVESTMENT on August 29, 2024 and sell it today you would earn a total of 193.00 from holding MGIC INVESTMENT or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ON SEMICONDUCTOR vs. MGIC INVESTMENT
Performance |
| Timeline |
| ON SEMICONDUCTOR |
| MGIC INVESTMENT |
ON SEMICONDUCTOR and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ON SEMICONDUCTOR and MGIC INVESTMENT
The main advantage of trading using opposite ON SEMICONDUCTOR and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ON SEMICONDUCTOR 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.| ON SEMICONDUCTOR vs. Apple Inc | ON SEMICONDUCTOR vs. Apple Inc | ON SEMICONDUCTOR vs. Superior Plus Corp | ON SEMICONDUCTOR vs. SIVERS SEMICONDUCTORS AB |
| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Superior Plus Corp | MGIC INVESTMENT vs. SIVERS SEMICONDUCTORS AB |
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.
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