Correlation Between Magic Software and Accenture Plc
Can any of the company-specific risk be diversified away by investing in both Magic Software and Accenture Plc 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 Accenture Plc 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 Accenture plc, you can compare the effects of market volatilities on Magic Software and Accenture Plc 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 Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Accenture Plc.
Diversification Opportunities for Magic Software and Accenture Plc
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magic and Accenture is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc 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 Accenture Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accenture plc has no effect on the direction of Magic Software i.e., Magic Software and Accenture Plc go up and down completely randomly.
Pair Corralation between Magic Software and Accenture Plc
Given the investment horizon of 90 days Magic Software Enterprises is expected to generate 1.38 times more return on investment than Accenture Plc. However, Magic Software is 1.38 times more volatile than Accenture plc. It trades about 0.1 of its potential returns per unit of risk. Accenture plc is currently generating about 0.05 per unit of risk. If you would invest 1,134 in Magic Software Enterprises on September 12, 2024 and sell it today you would earn a total of 152.00 from holding Magic Software Enterprises or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Accenture plc
Performance |
| Timeline |
| Magic Software Enter |
| Accenture plc |
Magic Software and Accenture Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Accenture Plc
The main advantage of trading using opposite Magic Software and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Accenture Plc 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 Accenture Plc will offset losses from the drop in Accenture Plc's long position.| Magic Software vs. The Hackett Group | Magic Software vs. CSP Inc | Magic Software vs. Nayax | Magic Software vs. Formula Systems 1985 |
| Accenture Plc vs. Globant SA | Accenture Plc vs. Concentrix | Accenture Plc vs. Cognizant Technology Solutions | Accenture Plc vs. CDW Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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