Correlation Between Transport International and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and MAGIC SOFTWARE.
Diversification Opportunities for Transport International and MAGIC SOFTWARE
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Transport and MAGIC is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin 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 Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between Transport International and MAGIC SOFTWARE
Assuming the 90 days horizon Transport International Holdings is expected to generate 0.95 times more return on investment than MAGIC SOFTWARE. However, Transport International Holdings is 1.05 times less risky than MAGIC SOFTWARE. It trades about 0.03 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.03 per unit of risk. If you would invest 95.00 in Transport International Holdings on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Transport International Holdings or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Transport International Holdin vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| Transport International |
| MAGIC SOFTWARE ENTR |
Transport International and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and MAGIC SOFTWARE
The main advantage of trading using opposite Transport International and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. Union Pacific | Transport International vs. Westinghouse Air Brake | Transport International vs. Superior Plus Corp | Transport International vs. NMI Holdings |
| MAGIC SOFTWARE vs. Transport International Holdings | MAGIC SOFTWARE vs. Coor Service Management | MAGIC SOFTWARE vs. Cleanaway Waste Management | MAGIC SOFTWARE vs. Transportadora de Gas |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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