Correlation Between MGIC Investment and Abcellera Biologics

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

Diversification Opportunities for MGIC Investment and Abcellera Biologics

-0.01

Correlation Coefficient

MGIC Investment  Abcellera Biologics

Good diversification

The 3 months correlation between MGIC and Abcellera is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Abcellera Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abcellera Biologics 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 Abcellera Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abcellera Biologics has no effect on the direction of MGIC Investment i.e., MGIC Investment and Abcellera Biologics go up and down completely randomly.

Pair Corralation between MGIC Investment and Abcellera Biologics

Considering the 90-day investment horizon MGIC Investment Corp is expected to under-perform the Abcellera Biologics. But the stock apears to be less risky and, when comparing its historical volatility, MGIC Investment Corp is 2.54 times less risky than Abcellera Biologics. The stock trades about -0.08 of its potential returns per unit of risk. The Abcellera Biologics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  274.00  in Abcellera Biologics on September 19, 2024 and sell it today you would lose (5.00) from holding Abcellera Biologics or give up 1.82% of portfolio value over 90 days.

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

MGIC Investment Corp  vs.  Abcellera Biologics

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 fragile 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.

Abcellera Biologics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Abcellera Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Abcellera Biologics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MGIC Investment and Abcellera Biologics

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

The idea behind MGIC Investment Corp and Abcellera Biologics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.