Correlation Between Magic Software and Erika Carmel
Can any of the company-specific risk be diversified away by investing in both Magic Software and Erika Carmel 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 Erika Carmel 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 Erika Carmel, you can compare the effects of market volatilities on Magic Software and Erika Carmel 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 Erika Carmel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Erika Carmel.
Diversification Opportunities for Magic Software and Erika Carmel
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magic and Erika is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Erika Carmel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erika Carmel 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 Erika Carmel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erika Carmel has no effect on the direction of Magic Software i.e., Magic Software and Erika Carmel go up and down completely randomly.
Pair Corralation between Magic Software and Erika Carmel
Assuming the 90 days trading horizon Magic Software Enterprises is expected to under-perform the Erika Carmel. But the stock apears to be less risky and, when comparing its historical volatility, Magic Software Enterprises is 1.28 times less risky than Erika Carmel. The stock trades about -0.03 of its potential returns per unit of risk. The Erika Carmel is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,220 in Erika Carmel on November 28, 2024 and sell it today you would earn a total of 80.00 from holding Erika Carmel or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Erika Carmel
Performance |
| Timeline |
| Magic Software Enter |
| Erika Carmel |
Magic Software and Erika Carmel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Erika Carmel
The main advantage of trading using opposite Magic Software and Erika Carmel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Erika Carmel 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 Erika Carmel will offset losses from the drop in Erika Carmel's long position.| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
| Erika Carmel vs. Alrov Properties Lodgings | Erika Carmel vs. Epitomee Medical | Erika Carmel vs. ICL Israel Chemicals | Erika Carmel vs. Harel Insurance Investments |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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