Correlation Between BANKINTER ADR and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both BANKINTER ADR 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 BANKINTER ADR and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANKINTER ADR 2007 and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on BANKINTER ADR 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 BANKINTER ADR with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANKINTER ADR and MAGIC SOFTWARE.
Diversification Opportunities for BANKINTER ADR and MAGIC SOFTWARE
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANKINTER and MAGIC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding BANKINTER ADR 2007 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 BANKINTER ADR 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 BANKINTER ADR 2007 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 BANKINTER ADR i.e., BANKINTER ADR and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between BANKINTER ADR and MAGIC SOFTWARE
Assuming the 90 days horizon BANKINTER ADR 2007 is expected to generate 0.78 times more return on investment than MAGIC SOFTWARE. However, BANKINTER ADR 2007 is 1.28 times less risky than MAGIC SOFTWARE. It trades about 0.35 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.23 per unit of risk. If you would invest 720.00 in BANKINTER ADR 2007 on October 30, 2024 and sell it today you would earn a total of 70.00 from holding BANKINTER ADR 2007 or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANKINTER ADR 2007 vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| BANKINTER ADR 2007 |
| MAGIC SOFTWARE ENTR |
BANKINTER ADR and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANKINTER ADR and MAGIC SOFTWARE
The main advantage of trading using opposite BANKINTER ADR and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANKINTER ADR 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.| BANKINTER ADR vs. PennantPark Investment | BANKINTER ADR vs. Gladstone Investment | BANKINTER ADR vs. DATANG INTL POW | BANKINTER ADR vs. China Datang |
| MAGIC SOFTWARE vs. Plastic Omnium | MAGIC SOFTWARE vs. LG Display Co | MAGIC SOFTWARE vs. Universal Display | MAGIC SOFTWARE vs. NEWELL RUBBERMAID |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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