Correlation Between MGIC Investment and NBCUNIVERSAL

Can any of the company-specific risk be diversified away by investing in both MGIC Investment and NBCUNIVERSAL 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 NBCUNIVERSAL 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 NBCUNIVERSAL MEDIA LLC, you can compare the effects of market volatilities on MGIC Investment and NBCUNIVERSAL 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 NBCUNIVERSAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and NBCUNIVERSAL.

Diversification Opportunities for MGIC Investment and NBCUNIVERSAL

0.47

Correlation Coefficient

MGIC Investment  NBCUNIVERSAL

Very weak diversification

The 3 months correlation between MGIC and NBCUNIVERSAL is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of MGIC Investment i.e., MGIC Investment and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between MGIC Investment and NBCUNIVERSAL

Considering the 90-day investment horizon MGIC Investment is expected to generate 78.71 times less return on investment than NBCUNIVERSAL. But when comparing it to its historical volatility, MGIC Investment Corp is 80.81 times less risky than NBCUNIVERSAL. It trades about 0.1 of its potential returns per unit of risk. NBCUNIVERSAL MEDIA LLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9,132  in NBCUNIVERSAL MEDIA LLC on September 28, 2024 and sell it today you would lose (1,305) from holding NBCUNIVERSAL MEDIA LLC or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	77.58%
Values	Daily Returns

MGIC Investment Corp  vs.  NBCUNIVERSAL MEDIA LLC

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 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.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NBCUNIVERSAL MEDIA LLC investors.

Pair Trading with MGIC Investment and NBCUNIVERSAL

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

The idea behind MGIC Investment Corp and NBCUNIVERSAL MEDIA LLC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.