Correlation Between MGIC Investment and 49456BAX9

Can any of the company-specific risk be diversified away by investing in both MGIC Investment and 49456BAX9 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 49456BAX9 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 KMI 52 01 JUN 33, you can compare the effects of market volatilities on MGIC Investment and 49456BAX9 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 49456BAX9. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and 49456BAX9.

Diversification Opportunities for MGIC Investment and 49456BAX9

0.11

Correlation Coefficient

MGIC Investment  49456BAX9

Average diversification

The 3 months correlation between MGIC and 49456BAX9 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and KMI 52 01 JUN 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMI 52 01 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 49456BAX9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMI 52 01 has no effect on the direction of MGIC Investment i.e., MGIC Investment and 49456BAX9 go up and down completely randomly.

Pair Corralation between MGIC Investment and 49456BAX9

Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 1.57 times more return on investment than 49456BAX9. However, MGIC Investment is 1.57 times more volatile than KMI 52 01 JUN 33. It trades about 0.01 of its potential returns per unit of risk. KMI 52 01 JUN 33 is currently generating about -0.07 per unit of risk. If you would invest  2,356  in MGIC Investment Corp on December 23, 2024 and sell it today you would lose (1.00) from holding MGIC Investment Corp or give up 0.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

MGIC Investment Corp  vs.  KMI 52 01 JUN 33

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.

KMI 52 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days KMI 52 01 JUN 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 49456BAX9 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 49456BAX9

The main advantage of trading using opposite MGIC Investment and 49456BAX9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, 49456BAX9 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 49456BAX9 will offset losses from the drop in 49456BAX9's long position.

The idea behind MGIC Investment Corp and KMI 52 01 JUN 33 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.