Correlation Between Performance Food and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Performance Food and MGIC INVESTMENT 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 Performance Food and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and MGIC INVESTMENT, you can compare the effects of market volatilities on Performance Food and MGIC INVESTMENT 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 Performance Food with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and MGIC INVESTMENT.
Diversification Opportunities for Performance Food and MGIC INVESTMENT
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Performance and MGIC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and Performance Food 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 Performance Food Group are associated (or correlated) with MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of Performance Food i.e., Performance Food and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Performance Food and MGIC INVESTMENT
Assuming the 90 days trading horizon Performance Food Group is expected to under-perform the MGIC INVESTMENT. In addition to that, Performance Food is 1.16 times more volatile than MGIC INVESTMENT. It trades about -0.14 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about -0.04 per unit of volatility. If you would invest 2,268 in MGIC INVESTMENT on December 23, 2024 and sell it today you would lose (88.00) from holding MGIC INVESTMENT or give up 3.88% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Performance Food Group vs. MGIC INVESTMENT
Performance |
Timeline |
Performance Food |
MGIC INVESTMENT |
Performance Food and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Performance Food and MGIC INVESTMENT
The main advantage of trading using opposite Performance Food and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, MGIC INVESTMENT 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 MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's long position.Performance Food vs. Ares Management Corp | Performance Food vs. LIFEWAY FOODS | Performance Food vs. Perdoceo Education | Performance Food vs. Ebro Foods SA |
MGIC INVESTMENT vs. AXWAY SOFTWARE EO | MGIC INVESTMENT vs. WESANA HEALTH HOLD | MGIC INVESTMENT vs. Check Point Software | MGIC INVESTMENT vs. MAGIC SOFTWARE ENTR |
Check out your portfolio center.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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