Correlation Between Dentsply Sirona and MGIC INVESTMENT

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

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

Diversification Opportunities for Dentsply Sirona and MGIC INVESTMENT

0.0

Correlation Coefficient

Dentsply Sirona  MGIC INVESTMENT

Pay attention - limited upside

The 3 months correlation between Dentsply and MGIC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and Dentsply Sirona 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 Dentsply Sirona 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 Dentsply Sirona i.e., Dentsply Sirona and MGIC INVESTMENT go up and down completely randomly.

Pair Corralation between Dentsply Sirona and MGIC INVESTMENT

Assuming the 90 days horizon Dentsply Sirona is expected to under-perform the MGIC INVESTMENT. In addition to that, Dentsply Sirona is 2.68 times more volatile than MGIC INVESTMENT. It trades about -0.06 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.01 per unit of volatility. If you would invest  2,346  in MGIC INVESTMENT on October 23, 2024 and sell it today you would earn a total of  14.00  from holding MGIC INVESTMENT or generate 0.6% return on investment over 90 days.

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

Dentsply Sirona  vs.  MGIC INVESTMENT

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MGIC INVESTMENT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MGIC INVESTMENT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, MGIC INVESTMENT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dentsply Sirona and MGIC INVESTMENT

The main advantage of trading using opposite Dentsply Sirona and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dentsply Sirona 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 Dentsply Sirona 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.