Correlation Between Kaufman Broad and MGIC INVESTMENT

Can any of the company-specific risk be diversified away by investing in both Kaufman Broad 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 Kaufman Broad and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kaufman Broad SA and MGIC INVESTMENT, you can compare the effects of market volatilities on Kaufman Broad 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 Kaufman Broad with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaufman Broad and MGIC INVESTMENT.

Diversification Opportunities for Kaufman Broad and MGIC INVESTMENT

-0.36

Correlation Coefficient

Kaufman Broad  MGIC INVESTMENT

Very good diversification

The 3 months correlation between Kaufman and MGIC is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and Kaufman Broad 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 Kaufman Broad SA 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 Kaufman Broad i.e., Kaufman Broad and MGIC INVESTMENT go up and down completely randomly.

Pair Corralation between Kaufman Broad and MGIC INVESTMENT

Assuming the 90 days horizon Kaufman Broad is expected to generate 1.48 times less return on investment than MGIC INVESTMENT. In addition to that, Kaufman Broad is 1.65 times more volatile than MGIC INVESTMENT. It trades about 0.04 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.11 per unit of volatility. If you would invest  1,425  in MGIC INVESTMENT on October 3, 2024 and sell it today you would earn a total of  855.00  from holding MGIC INVESTMENT or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kaufman Broad SA  vs.  MGIC INVESTMENT

Kaufman Broad SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaufman Broad SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kaufman Broad is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MGIC INVESTMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGIC INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, MGIC INVESTMENT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kaufman Broad and MGIC INVESTMENT

The main advantage of trading using opposite Kaufman Broad and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaufman Broad 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.

The idea behind Kaufman Broad SA and MGIC INVESTMENT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.