Correlation Between Lend Lease and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Lend Lease 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 Lend Lease and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lend Lease Group and MGIC Investment Corp, you can compare the effects of market volatilities on Lend Lease 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 Lend Lease with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lend Lease and MGIC Investment.
Diversification Opportunities for Lend Lease and MGIC Investment
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lend and MGIC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lend Lease Group 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 Lend Lease 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 Lend Lease 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 Corp has no effect on the direction of Lend Lease i.e., Lend Lease and MGIC Investment go up and down completely randomly.
Pair Corralation between Lend Lease and MGIC Investment
Assuming the 90 days horizon Lend Lease Group is expected to under-perform the MGIC Investment. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lend Lease Group is 1.03 times less risky than MGIC Investment. The pink sheet trades about -0.12 of its potential returns per unit of risk. The MGIC Investment Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,908 in MGIC Investment Corp on February 18, 2024 and sell it today you would earn a total of 211.00 from holding MGIC Investment Corp or generate 11.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lend Lease Group vs. MGIC Investment Corp
Performance |
Timeline |
Lend Lease Group |
MGIC Investment Corp |
Lend Lease and MGIC Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lend Lease and MGIC Investment
The main advantage of trading using opposite Lend Lease and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lend Lease 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.Lend Lease vs. Comstock Holding Companies | Lend Lease vs. St Joe Company | Lend Lease vs. Stratus Properties |
MGIC Investment vs. MBIA Inc | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings | MGIC Investment vs. James River Group |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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