Correlation Between Magic Software and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both Magic Software and WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments, you can compare the effects of market volatilities on Magic Software and WisdomTree Investments 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 WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and WisdomTree Investments.
Diversification Opportunities for Magic Software and WisdomTree Investments
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magic and WisdomTree is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments 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 WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of Magic Software i.e., Magic Software and WisdomTree Investments go up and down completely randomly.
Pair Corralation between Magic Software and WisdomTree Investments
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 1.28 times more return on investment than WisdomTree Investments. However, Magic Software is 1.28 times more volatile than WisdomTree Investments. It trades about -0.05 of its potential returns per unit of risk. WisdomTree Investments is currently generating about -0.31 per unit of risk. If you would invest 1,136 in Magic Software Enterprises on September 30, 2024 and sell it today you would lose (26.00) from holding Magic Software Enterprises or give up 2.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. WisdomTree Investments
Performance |
| Timeline |
| Magic Software Enter |
| WisdomTree Investments |
Magic Software and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and WisdomTree Investments
The main advantage of trading using opposite Magic Software and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, WisdomTree Investments 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 WisdomTree Investments will offset losses from the drop in WisdomTree Investments' long position.| Magic Software vs. Intuit Inc | Magic Software vs. Palo Alto Networks | Magic Software vs. Synopsys | Magic Software vs. Cadence Design Systems |
| WisdomTree Investments vs. GRIFFIN MINING LTD | WisdomTree Investments vs. VULCAN MATERIALS | WisdomTree Investments vs. EAGLE MATERIALS | WisdomTree Investments vs. KENNAMETAL INC |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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