Correlation Between Magic Software and Trident Digital
Can any of the company-specific risk be diversified away by investing in both Magic Software and Trident Digital 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 Trident Digital 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 Trident Digital Tech, you can compare the effects of market volatilities on Magic Software and Trident Digital 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 Trident Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Trident Digital.
Diversification Opportunities for Magic Software and Trident Digital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magic and Trident is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Trident Digital Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trident Digital Tech 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 Trident Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trident Digital Tech has no effect on the direction of Magic Software i.e., Magic Software and Trident Digital go up and down completely randomly.
Pair Corralation between Magic Software and Trident Digital
Given the investment horizon of 90 days Magic Software Enterprises is expected to generate 0.39 times more return on investment than Trident Digital. However, Magic Software Enterprises is 2.57 times less risky than Trident Digital. It trades about -0.01 of its potential returns per unit of risk. Trident Digital Tech is currently generating about -0.12 per unit of risk. If you would invest 1,533 in Magic Software Enterprises on August 28, 2024 and sell it today you would lose (387.00) from holding Magic Software Enterprises or give up 25.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 11.11% |
| Values | Daily Returns |
Magic Software Enterprises vs. Trident Digital Tech
Performance |
| Timeline |
| Magic Software Enter |
| Trident Digital Tech |
Magic Software and Trident Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Trident Digital
The main advantage of trading using opposite Magic Software and Trident Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Trident Digital 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 Trident Digital will offset losses from the drop in Trident Digital's long position.| Magic Software vs. The Hackett Group | Magic Software vs. CSP Inc | Magic Software vs. Nayax | Magic Software vs. Formula Systems 1985 |
| Trident Digital vs. Data Storage Corp | Trident Digital vs. Usio Inc | Trident Digital vs. ARB IOT Group | Trident Digital vs. FiscalNote Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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