Correlation Between CHINA SOUTHN and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN 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 CHINA SOUTHN and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA SOUTHN AIR H and MGIC INVESTMENT, you can compare the effects of market volatilities on CHINA SOUTHN 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 CHINA SOUTHN with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and MGIC INVESTMENT.
Diversification Opportunities for CHINA SOUTHN and MGIC INVESTMENT
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CHINA and MGIC is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and CHINA SOUTHN 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 CHINA SOUTHN AIR H 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 CHINA SOUTHN i.e., CHINA SOUTHN and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between CHINA SOUTHN and MGIC INVESTMENT
Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to under-perform the MGIC INVESTMENT. In addition to that, CHINA SOUTHN is 2.32 times more volatile than MGIC INVESTMENT. It trades about -0.09 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.28 per unit of volatility. If you would invest 2,300 in MGIC INVESTMENT on November 4, 2024 and sell it today you would earn a total of 180.00 from holding MGIC INVESTMENT or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA SOUTHN AIR H vs. MGIC INVESTMENT
Performance |
| Timeline |
| CHINA SOUTHN AIR |
| MGIC INVESTMENT |
CHINA SOUTHN and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA SOUTHN and MGIC INVESTMENT
The main advantage of trading using opposite CHINA SOUTHN and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN 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.| CHINA SOUTHN vs. Direct Line Insurance | CHINA SOUTHN vs. Webster Financial | CHINA SOUTHN vs. UNIQA INSURANCE GR | CHINA SOUTHN vs. Nomad Foods |
| MGIC INVESTMENT vs. Reinsurance Group of | MGIC INVESTMENT vs. SIDETRADE EO 1 | MGIC INVESTMENT vs. Zurich Insurance Group | MGIC INVESTMENT vs. Salesforce |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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