Correlation Between Everspin Technologies and MGIC Investment

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

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

Diversification Opportunities for Everspin Technologies and MGIC Investment

-0.14

Correlation Coefficient

Everspin Technologies  MGIC Investment

Good diversification

The 3 months correlation between Everspin and MGIC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Everspin Technologies 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 Everspin Technologies 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 Everspin Technologies 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 Everspin Technologies i.e., Everspin Technologies and MGIC Investment go up and down completely randomly.

Pair Corralation between Everspin Technologies and MGIC Investment

Given the investment horizon of 90 days Everspin Technologies is expected to generate 1.42 times more return on investment than MGIC Investment. However, Everspin Technologies is 1.42 times more volatile than MGIC Investment Corp. It trades about -0.1 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about -0.31 per unit of risk. If you would invest  645.00  in Everspin Technologies on October 13, 2024 and sell it today you would lose (26.00) from holding Everspin Technologies or give up 4.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Everspin Technologies  vs.  MGIC Investment Corp

Everspin Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everspin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Everspin Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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 Everspin Technologies and MGIC Investment

The main advantage of trading using opposite Everspin Technologies and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everspin Technologies 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 Everspin Technologies 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.