Correlation Between Freedom Holding and MGIC Investment

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

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

Diversification Opportunities for Freedom Holding and MGIC Investment

-0.46

Correlation Coefficient

Freedom Holding  MGIC Investment

Very good diversification

The 3 months correlation between Freedom and MGIC is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and MGIC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment Corp and Freedom Holding 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 Freedom Holding Corp 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 Corp has no effect on the direction of Freedom Holding i.e., Freedom Holding and MGIC Investment go up and down completely randomly.

Pair Corralation between Freedom Holding and MGIC Investment

Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 1.67 times more return on investment than MGIC Investment. However, Freedom Holding is 1.67 times more volatile than MGIC Investment Corp. It trades about 0.07 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.09 per unit of risk. If you would invest  6,234  in Freedom Holding Corp on October 10, 2024 and sell it today you would earn a total of  6,866  from holding Freedom Holding Corp or generate 110.14% return on investment over 90 days.

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

Freedom Holding Corp  vs.  MGIC Investment Corp

Freedom Holding Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

MGIC Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGIC Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Freedom Holding and MGIC Investment

The main advantage of trading using opposite Freedom Holding and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding 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 Freedom Holding Corp and MGIC Investment Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.