Correlation Between MGIC Investment and ReAlpha Tech

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

By analyzing existing cross correlation between MGIC Investment Corp and reAlpha Tech Corp, you can compare the effects of market volatilities on MGIC Investment and ReAlpha Tech 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 ReAlpha Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and ReAlpha Tech.

Diversification Opportunities for MGIC Investment and ReAlpha Tech

0.08

Correlation Coefficient

MGIC Investment  ReAlpha Tech

Significant diversification

The 3 months correlation between MGIC and ReAlpha is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and reAlpha Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on reAlpha Tech Corp 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 Corp are associated (or correlated) with ReAlpha Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of reAlpha Tech Corp has no effect on the direction of MGIC Investment i.e., MGIC Investment and ReAlpha Tech go up and down completely randomly.

Pair Corralation between MGIC Investment and ReAlpha Tech

Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 0.2 times more return on investment than ReAlpha Tech. However, MGIC Investment Corp is 4.92 times less risky than ReAlpha Tech. It trades about 0.07 of its potential returns per unit of risk. reAlpha Tech Corp is currently generating about -0.14 per unit of risk. If you would invest  2,357  in MGIC Investment Corp on December 27, 2024 and sell it today you would earn a total of  117.00  from holding MGIC Investment Corp or generate 4.96% return on investment over 90 days.

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

MGIC Investment Corp  vs.  reAlpha Tech Corp

MGIC Investment Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MGIC Investment Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MGIC Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

reAlpha Tech Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days reAlpha Tech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MGIC Investment and ReAlpha Tech

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

The idea behind MGIC Investment Corp and reAlpha Tech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.