Correlation Between Applied Digital and Magic Empire
Can any of the company-specific risk be diversified away by investing in both Applied Digital and Magic Empire 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 Applied Digital and Magic Empire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Digital and Magic Empire Global, you can compare the effects of market volatilities on Applied Digital and Magic Empire 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 Applied Digital with a short position of Magic Empire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Digital and Magic Empire.
Diversification Opportunities for Applied Digital and Magic Empire
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Applied and Magic is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and Magic Empire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Empire Global and Applied Digital 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 Applied Digital are associated (or correlated) with Magic Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Empire Global has no effect on the direction of Applied Digital i.e., Applied Digital and Magic Empire go up and down completely randomly.
Pair Corralation between Applied Digital and Magic Empire
Given the investment horizon of 90 days Applied Digital is expected to under-perform the Magic Empire. But the stock apears to be less risky and, when comparing its historical volatility, Applied Digital is 1.71 times less risky than Magic Empire. The stock trades about 0.0 of its potential returns per unit of risk. The Magic Empire Global is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 52.00 in Magic Empire Global on November 3, 2024 and sell it today you would earn a total of 2.00 from holding Magic Empire Global or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Digital vs. Magic Empire Global
Performance |
| Timeline |
| Applied Digital |
| Magic Empire Global |
Applied Digital and Magic Empire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Digital and Magic Empire
The main advantage of trading using opposite Applied Digital and Magic Empire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Digital position performs unexpectedly, Magic Empire 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 Empire will offset losses from the drop in Magic Empire's long position.| Applied Digital vs. Magic Empire Global | Applied Digital vs. Zhong Yang Financial | Applied Digital vs. Netcapital | Applied Digital vs. Lazard |
| Magic Empire vs. Netcapital | Magic Empire vs. Applied Digital | Magic Empire vs. Zhong Yang Financial | Magic Empire vs. Mercurity Fintech Holding |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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