Correlation Between MGIC Investment and 686330AJ0

Can any of the company-specific risk be diversified away by investing in both MGIC Investment and 686330AJ0 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 686330AJ0 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 ORIX P 37, you can compare the effects of market volatilities on MGIC Investment and 686330AJ0 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 686330AJ0. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC Investment and 686330AJ0.

Diversification Opportunities for MGIC Investment and 686330AJ0

-0.43

Correlation Coefficient

MGIC Investment  686330AJ0

Very good diversification

The 3 months correlation between MGIC and 686330AJ0 is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and ORIX P 37 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX P 37 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 686330AJ0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX P 37 has no effect on the direction of MGIC Investment i.e., MGIC Investment and 686330AJ0 go up and down completely randomly.

Pair Corralation between MGIC Investment and 686330AJ0

Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 3.9 times more return on investment than 686330AJ0. However, MGIC Investment is 3.9 times more volatile than ORIX P 37. It trades about 0.05 of its potential returns per unit of risk. ORIX P 37 is currently generating about -0.02 per unit of risk. If you would invest  2,353  in MGIC Investment Corp on December 30, 2024 and sell it today you would earn a total of  87.00  from holding MGIC Investment Corp or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	59.68%
Values	Daily Returns

MGIC Investment Corp  vs.  ORIX P 37

MGIC Investment Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MGIC Investment Corp are ranked lower than 3 (%) 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.

ORIX P 37

Risk-Adjusted Performance

Very Weak

Over the last 90 days ORIX P 37 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 686330AJ0 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MGIC Investment and 686330AJ0

The main advantage of trading using opposite MGIC Investment and 686330AJ0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC Investment position performs unexpectedly, 686330AJ0 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 686330AJ0 will offset losses from the drop in 686330AJ0's long position.

The idea behind MGIC Investment Corp and ORIX P 37 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.