Correlation Between MGIC Investment and 105340AR4

Can any of the company-specific risk be diversified away by investing in both MGIC Investment and 105340AR4 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 105340AR4 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 BDN 755 15 MAR 28, you can compare the effects of market volatilities on MGIC Investment and 105340AR4 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 105340AR4. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and 105340AR4.

Diversification Opportunities for MGIC Investment and 105340AR4

0.21

Correlation Coefficient

MGIC Investment  105340AR4

Modest diversification

The 3 months correlation between MGIC and 105340AR4 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and BDN 755 15 MAR 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BDN 755 15 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 105340AR4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BDN 755 15 has no effect on the direction of MGIC Investment i.e., MGIC Investment and 105340AR4 go up and down completely randomly.

Pair Corralation between MGIC Investment and 105340AR4

Considering the 90-day investment horizon MGIC Investment Corp is expected to under-perform the 105340AR4. But the stock apears to be less risky and, when comparing its historical volatility, MGIC Investment Corp is 2.89 times less risky than 105340AR4. The stock trades about 0.0 of its potential returns per unit of risk. The BDN 755 15 MAR 28 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  10,499  in BDN 755 15 MAR 28 on December 24, 2024 and sell it today you would lose (98.00) from holding BDN 755 15 MAR 28 or give up 0.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

MGIC Investment Corp  vs.  BDN 755 15 MAR 28

MGIC Investment Corp

Risk-Adjusted Performance

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 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.

BDN 755 15

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BDN 755 15 MAR 28 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 105340AR4 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MGIC Investment and 105340AR4

The main advantage of trading using opposite MGIC Investment and 105340AR4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, 105340AR4 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 105340AR4 will offset losses from the drop in 105340AR4's long position.

The idea behind MGIC Investment Corp and BDN 755 15 MAR 28 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 CEOs Directory module to screen CEOs from public companies around the world.