Correlation Between Dow Jones and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and MGIC Investment, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and MGIC Investment.
Diversification Opportunities for Dow Jones and MGIC Investment
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and MGIC is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and MGIC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and MGIC Investment go up and down completely randomly.
Pair Corralation between Dow Jones and MGIC Investment
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.51 times more return on investment than MGIC Investment. However, Dow Jones Industrial is 1.96 times less risky than MGIC Investment. It trades about -0.02 of its potential returns per unit of risk. MGIC Investment is currently generating about -0.02 per unit of risk. If you would invest 4,299,221 in Dow Jones Industrial on December 27, 2024 and sell it today you would lose (53,742) from holding Dow Jones Industrial or give up 1.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 96.77% |
Values | Daily Returns |
Dow Jones Industrial vs. MGIC Investment
Performance |
Timeline |
Dow Jones and MGIC Investment Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
MGIC Investment
Pair trading matchups for MGIC Investment
Pair Trading with Dow Jones and MGIC Investment
The main advantage of trading using opposite Dow Jones and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.Dow Jones vs. Pintec Technology Holdings | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Chiba Bank Ltd | Dow Jones vs. Alvotech |
MGIC Investment vs. Ross Stores | MGIC Investment vs. WILLIS LEASE FIN | MGIC Investment vs. Sixt Leasing SE | MGIC Investment vs. Air Lease |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |