Correlation Between Magic Software and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both Magic Software and Virtu Financial 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 Virtu Financial 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 Virtu Financial, you can compare the effects of market volatilities on Magic Software and Virtu Financial 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 Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Virtu Financial.
Diversification Opportunities for Magic Software and Virtu Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magic and Virtu is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial 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 Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of Magic Software i.e., Magic Software and Virtu Financial go up and down completely randomly.
Pair Corralation between Magic Software and Virtu Financial
Assuming the 90 days horizon Magic Software is expected to generate 1.37 times less return on investment than Virtu Financial. But when comparing it to its historical volatility, Magic Software Enterprises is 1.11 times less risky than Virtu Financial. It trades about 0.18 of its potential returns per unit of risk. Virtu Financial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,480 in Virtu Financial on November 4, 2024 and sell it today you would earn a total of 300.00 from holding Virtu Financial or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Virtu Financial
Performance |
| Timeline |
| Magic Software Enter |
| Virtu Financial |
Magic Software and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Virtu Financial
The main advantage of trading using opposite Magic Software and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Virtu Financial 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 Virtu Financial will offset losses from the drop in Virtu Financial's long position.| Magic Software vs. Verizon Communications | Magic Software vs. Geely Automobile Holdings | Magic Software vs. SALESFORCE INC CDR | Magic Software vs. Entravision Communications |
| Virtu Financial vs. Iridium Communications | Virtu Financial vs. CLOVER HEALTH INV | Virtu Financial vs. MAVEN WIRELESS SWEDEN | Virtu Financial vs. SHIP HEALTHCARE HLDGINC |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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