Correlation Between MGIC Investment and Teleflex Incorporated

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

Diversification Opportunities for MGIC Investment and Teleflex Incorporated

0.14

Correlation Coefficient

MGIC Investment  Teleflex Incorporated

Average diversification

The 3 months correlation between MGIC and Teleflex is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding MGIC Investment Corp and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of MGIC Investment i.e., MGIC Investment and Teleflex Incorporated go up and down completely randomly.

Pair Corralation between MGIC Investment and Teleflex Incorporated

Considering the 90-day investment horizon MGIC Investment Corp is expected to generate 1.05 times more return on investment than Teleflex Incorporated. However, MGIC Investment is 1.05 times more volatile than Teleflex Incorporated. It trades about 0.37 of its potential returns per unit of risk. Teleflex Incorporated is currently generating about -0.22 per unit of risk. If you would invest  2,340  in MGIC Investment Corp on September 4, 2024 and sell it today you would earn a total of  263.00  from holding MGIC Investment Corp or generate 11.24% return on investment over 90 days.

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

MGIC Investment Corp  vs.  Teleflex Incorporated

MGIC Investment Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MGIC Investment Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MGIC Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Teleflex Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleflex Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MGIC Investment and Teleflex Incorporated

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

The idea behind MGIC Investment Corp and Teleflex Incorporated 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.