Correlation Between Magic Software and Avrot Industries
Can any of the company-specific risk be diversified away by investing in both Magic Software and Avrot Industries 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 Magic Software and Avrot Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magic Software Enterprises and Avrot Industries, you can compare the effects of market volatilities on Magic Software and Avrot Industries 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 Magic Software with a short position of Avrot Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Avrot Industries.
Diversification Opportunities for Magic Software and Avrot Industries
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magic and Avrot is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Avrot Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avrot Industries and Magic Software 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 Magic Software Enterprises are associated (or correlated) with Avrot Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avrot Industries has no effect on the direction of Magic Software i.e., Magic Software and Avrot Industries go up and down completely randomly.
Pair Corralation between Magic Software and Avrot Industries
Assuming the 90 days trading horizon Magic Software Enterprises is expected to generate 0.76 times more return on investment than Avrot Industries. However, Magic Software Enterprises is 1.32 times less risky than Avrot Industries. It trades about -0.02 of its potential returns per unit of risk. Avrot Industries is currently generating about -0.02 per unit of risk. If you would invest 569,722 in Magic Software Enterprises on August 27, 2024 and sell it today you would lose (158,922) from holding Magic Software Enterprises or give up 27.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Avrot Industries
Performance |
| Timeline |
| Magic Software Enter |
| Avrot Industries |
Magic Software and Avrot Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Avrot Industries
The main advantage of trading using opposite Magic Software and Avrot Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Avrot Industries 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 Avrot Industries will offset losses from the drop in Avrot Industries' long position.| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
| Avrot Industries vs. Arad | Avrot Industries vs. Alony Hetz Properties | Avrot Industries vs. Danel | Avrot Industries vs. Airport City |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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