Correlation Between Apple and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on Apple 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 Apple with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and MAGIC SOFTWARE.
Diversification Opportunities for Apple and MAGIC SOFTWARE
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and MAGIC is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between Apple and MAGIC SOFTWARE
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.5 times more return on investment than MAGIC SOFTWARE. However, Apple Inc is 2.01 times less risky than MAGIC SOFTWARE. It trades about 0.08 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.01 per unit of risk. If you would invest 14,150 in Apple Inc on November 5, 2024 and sell it today you would earn a total of 8,595 from holding Apple Inc or generate 60.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| Apple Inc |
| MAGIC SOFTWARE ENTR |
Apple and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and MAGIC SOFTWARE
The main advantage of trading using opposite Apple and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Agilent Technologies | Apple vs. Allegheny Technologies Incorporated | Apple vs. TOWNSQUARE MEDIA INC | Apple vs. Playtech plc |
| MAGIC SOFTWARE vs. COLUMBIA SPORTSWEAR | MAGIC SOFTWARE vs. USWE SPORTS AB | MAGIC SOFTWARE vs. UNIQA INSURANCE GR | MAGIC SOFTWARE vs. REVO INSURANCE SPA |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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