Correlation Between Heritage Global and Magic Empire
Can any of the company-specific risk be diversified away by investing in both Heritage Global 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 Heritage Global and Magic Empire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Global and Magic Empire Global, you can compare the effects of market volatilities on Heritage Global 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 Heritage Global with a short position of Magic Empire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Global and Magic Empire.
Diversification Opportunities for Heritage Global and Magic Empire
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heritage and Magic is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Global 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 Heritage Global 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 Heritage Global 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 Heritage Global i.e., Heritage Global and Magic Empire go up and down completely randomly.
Pair Corralation between Heritage Global and Magic Empire
Given the investment horizon of 90 days Heritage Global is expected to under-perform the Magic Empire. But the stock apears to be less risky and, when comparing its historical volatility, Heritage Global is 5.56 times less risky than Magic Empire. The stock trades about -0.01 of its potential returns per unit of risk. The Magic Empire Global is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 208.00 in Magic Empire Global on August 26, 2024 and sell it today you would lose (158.00) from holding Magic Empire Global or give up 75.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage Global vs. Magic Empire Global
Performance |
| Timeline |
| Heritage Global |
| Magic Empire Global |
Heritage Global and Magic Empire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Global and Magic Empire
The main advantage of trading using opposite Heritage Global and Magic Empire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Global 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.| Heritage Global vs. Scully Royalty | Heritage Global vs. Mercurity Fintech Holding | Heritage Global vs. Donnelley Financial Solutions | Heritage Global vs. Oppenheimer Holdings |
| Magic Empire vs. Netcapital | Magic Empire vs. Applied Blockchain | 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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