Correlation Between Magic Software and Plaza Centers
Can any of the company-specific risk be diversified away by investing in both Magic Software and Plaza Centers 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 Plaza Centers 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 Plaza Centers NV, you can compare the effects of market volatilities on Magic Software and Plaza Centers 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 Plaza Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Plaza Centers.
Diversification Opportunities for Magic Software and Plaza Centers
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magic and Plaza is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Plaza Centers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Centers NV 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 Plaza Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Centers NV has no effect on the direction of Magic Software i.e., Magic Software and Plaza Centers go up and down completely randomly.
Pair Corralation between Magic Software and Plaza Centers
Assuming the 90 days trading horizon Magic Software is expected to generate 28.96 times less return on investment than Plaza Centers. But when comparing it to its historical volatility, Magic Software Enterprises is 7.83 times less risky than Plaza Centers. It trades about 0.02 of its potential returns per unit of risk. Plaza Centers NV is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 22,000 in Plaza Centers NV on September 3, 2024 and sell it today you would lose (1,780) from holding Plaza Centers NV or give up 8.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Plaza Centers NV
Performance |
| Timeline |
| Magic Software Enter |
| Plaza Centers NV |
Magic Software and Plaza Centers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Plaza Centers
The main advantage of trading using opposite Magic Software and Plaza Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Plaza Centers 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 Plaza Centers will offset losses from the drop in Plaza Centers' long position.| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
| Plaza Centers vs. Brainsway | Plaza Centers vs. Mivne Real Estate | Plaza Centers vs. Photomyne | Plaza Centers vs. Israel Land Development |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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