Correlation Between MGIC INVESTMENT and Vastned Retail

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Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Vastned Retail 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 Vastned Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Vastned Retail NV, you can compare the effects of market volatilities on MGIC INVESTMENT and Vastned Retail 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 Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Vastned Retail.

Diversification Opportunities for MGIC INVESTMENT and Vastned Retail

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between MGIC and Vastned is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail NV 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 Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Vastned Retail go up and down completely randomly.

Pair Corralation between MGIC INVESTMENT and Vastned Retail

Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 1.69 times more return on investment than Vastned Retail. However, MGIC INVESTMENT is 1.69 times more volatile than Vastned Retail NV. It trades about 0.05 of its potential returns per unit of risk. Vastned Retail NV is currently generating about -0.04 per unit of risk. If you would invest  2,247  in MGIC INVESTMENT on September 14, 2024 and sell it today you would earn a total of  93.00  from holding MGIC INVESTMENT or generate 4.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

MGIC INVESTMENT  vs.  Vastned Retail NV

 Performance 
       Timeline  
MGIC INVESTMENT 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in MGIC INVESTMENT are ranked lower than 4 (%) 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.
Vastned Retail NV 

Risk-Adjusted Performance

0 of 100

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

MGIC INVESTMENT and Vastned Retail Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MGIC INVESTMENT and Vastned Retail

The main advantage of trading using opposite MGIC INVESTMENT and Vastned Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, Vastned Retail 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 Vastned Retail will offset losses from the drop in Vastned Retail's long position.
The idea behind MGIC INVESTMENT and Vastned Retail NV 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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