Correlation Between National Beverage and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both National Beverage and MAGIC SOFTWARE 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 National Beverage and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on National Beverage and MAGIC SOFTWARE 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 National Beverage with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and MAGIC SOFTWARE.
Diversification Opportunities for National Beverage and MAGIC SOFTWARE
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and MAGIC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and MAGIC SOFTWARE ENTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGIC SOFTWARE ENTR and National Beverage 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 National Beverage Corp are associated (or correlated) with MAGIC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGIC SOFTWARE ENTR has no effect on the direction of National Beverage i.e., National Beverage and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between National Beverage and MAGIC SOFTWARE
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the MAGIC SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.6 times less risky than MAGIC SOFTWARE. The stock trades about -0.1 of its potential returns per unit of risk. The MAGIC SOFTWARE ENTR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,008 in MAGIC SOFTWARE ENTR on October 17, 2024 and sell it today you would earn a total of 152.00 from holding MAGIC SOFTWARE ENTR or generate 15.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| National Beverage Corp |
| MAGIC SOFTWARE ENTR |
National Beverage and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and MAGIC SOFTWARE
The main advantage of trading using opposite National Beverage and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, MAGIC SOFTWARE 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 MAGIC SOFTWARE will offset losses from the drop in MAGIC SOFTWARE's long position.| National Beverage vs. American Homes 4 | National Beverage vs. Siamgas And Petrochemicals | National Beverage vs. KENEDIX OFFICE INV | National Beverage vs. DAIRY FARM INTL |
| MAGIC SOFTWARE vs. BANKINTER ADR 2007 | MAGIC SOFTWARE vs. JSC Halyk bank | MAGIC SOFTWARE vs. National Beverage Corp | MAGIC SOFTWARE vs. THAI BEVERAGE |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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