Correlation Between MGIC INVESTMENT and AMAG Austria

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

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

Diversification Opportunities for MGIC INVESTMENT and AMAG Austria

-0.5

Correlation Coefficient

MGIC INVESTMENT  AMAG Austria

Very good diversification

The 3 months correlation between MGIC and AMAG is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and AMAG Austria Metall in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAG Austria Metall and MGIC INVESTMENT 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 MGIC INVESTMENT are associated (or correlated) with AMAG Austria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAG Austria Metall has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and AMAG Austria go up and down completely randomly.

Pair Corralation between MGIC INVESTMENT and AMAG Austria

Assuming the 90 days trading horizon MGIC INVESTMENT is expected to under-perform the AMAG Austria. In addition to that, MGIC INVESTMENT is 1.05 times more volatile than AMAG Austria Metall. It trades about -0.12 of its total potential returns per unit of risk. AMAG Austria Metall is currently generating about 0.05 per unit of volatility. If you would invest  2,390  in AMAG Austria Metall on October 12, 2024 and sell it today you would earn a total of  20.00  from holding AMAG Austria Metall or generate 0.84% return on investment over 90 days.

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

MGIC INVESTMENT  vs.  AMAG Austria Metall

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

AMAG Austria Metall

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMAG Austria Metall are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AMAG Austria is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MGIC INVESTMENT and AMAG Austria

The main advantage of trading using opposite MGIC INVESTMENT and AMAG Austria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, AMAG Austria 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 AMAG Austria will offset losses from the drop in AMAG Austria's long position.

The idea behind MGIC INVESTMENT and AMAG Austria Metall 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.