Correlation Between Perella Weinberg and MGIC Investment

Can any of the company-specific risk be diversified away by investing in both Perella Weinberg 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 Perella Weinberg and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perella Weinberg Partners and MGIC Investment Corp, you can compare the effects of market volatilities on Perella Weinberg 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 Perella Weinberg with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perella Weinberg and MGIC Investment.

Diversification Opportunities for Perella Weinberg and MGIC Investment

0.13

Correlation Coefficient

Perella Weinberg  MGIC Investment

Average diversification

The 3 months correlation between Perella and MGIC is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Perella Weinberg Partners and MGIC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment Corp and Perella Weinberg 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 Perella Weinberg Partners 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 Corp has no effect on the direction of Perella Weinberg i.e., Perella Weinberg and MGIC Investment go up and down completely randomly.

Pair Corralation between Perella Weinberg and MGIC Investment

Considering the 90-day investment horizon Perella Weinberg Partners is expected to under-perform the MGIC Investment. In addition to that, Perella Weinberg is 1.65 times more volatile than MGIC Investment Corp. It trades about -0.13 of its total potential returns per unit of risk. MGIC Investment Corp is currently generating about -0.15 per unit of volatility. If you would invest  2,457  in MGIC Investment Corp on October 11, 2024 and sell it today you would lose (94.00) from holding MGIC Investment Corp or give up 3.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Perella Weinberg Partners  vs.  MGIC Investment Corp

Perella Weinberg Partners

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perella Weinberg Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Perella Weinberg may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Perella Weinberg and MGIC Investment

The main advantage of trading using opposite Perella Weinberg and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perella Weinberg 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.

The idea behind Perella Weinberg Partners and MGIC Investment Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.