Correlation Between MGIC Investment and Falcon Metals

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

Diversification Opportunities for MGIC Investment and Falcon Metals

0.39

Correlation Coefficient

MGIC Investment  Falcon Metals

Weak diversification

The 3 months correlation between MGIC and Falcon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Falcon Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals Limited 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 Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals Limited has no effect on the direction of MGIC Investment i.e., MGIC Investment and Falcon Metals go up and down completely randomly.

Pair Corralation between MGIC Investment and Falcon Metals

If you would invest  7.00  in Falcon Metals Limited on March 12, 2024 and sell it today you would earn a total of  0.00  from holding Falcon Metals Limited or generate 0.0% return on investment over 90 days.

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

MGIC Investment Corp  vs.  Falcon Metals Limited

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Falcon Metals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental 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 MGIC Investment and Falcon Metals

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

The idea behind MGIC Investment Corp and Falcon Metals Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.