Correlation Between Perdoceo Education and Magic Software
Can any of the company-specific risk be diversified away by investing in both Perdoceo Education 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 Perdoceo Education and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perdoceo Education and Magic Software Enterprises, you can compare the effects of market volatilities on Perdoceo Education 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 Perdoceo Education with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perdoceo Education and Magic Software.
Diversification Opportunities for Perdoceo Education and Magic Software
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Perdoceo and Magic is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Perdoceo Education and Magic Software Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Software Enter and Perdoceo Education 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 Perdoceo Education 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 Enter has no effect on the direction of Perdoceo Education i.e., Perdoceo Education and Magic Software go up and down completely randomly.
Pair Corralation between Perdoceo Education and Magic Software
Assuming the 90 days horizon Perdoceo Education is expected to generate 1.55 times less return on investment than Magic Software. But when comparing it to its historical volatility, Perdoceo Education is 1.23 times less risky than Magic Software. It trades about 0.25 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,090 in Magic Software Enterprises on October 30, 2024 and sell it today you would earn a total of 110.00 from holding Magic Software Enterprises or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perdoceo Education vs. Magic Software Enterprises
Performance |
| Timeline |
| Perdoceo Education |
| Magic Software Enter |
Perdoceo Education and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perdoceo Education and Magic Software
The main advantage of trading using opposite Perdoceo Education and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perdoceo Education 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.| Perdoceo Education vs. IDP EDUCATION LTD | Perdoceo Education vs. TAL Education Group | Perdoceo Education vs. Grand Canyon Education | Perdoceo Education vs. Graham Holdings Co |
| Magic Software vs. TRADELINK ELECTRON | Magic Software vs. FIRST SHIP LEASE | Magic Software vs. Sixt Leasing SE | Magic Software vs. TRADEDOUBLER AB SK |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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