Correlation Between Magic Software and Air Canada
Can any of the company-specific risk be diversified away by investing in both Magic Software and Air Canada 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 Air Canada 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 Air Canada, you can compare the effects of market volatilities on Magic Software and Air Canada 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 Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Air Canada.
Diversification Opportunities for Magic Software and Air Canada
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magic and Air is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada 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 Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Magic Software i.e., Magic Software and Air Canada go up and down completely randomly.
Pair Corralation between Magic Software and Air Canada
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 1.91 times more return on investment than Air Canada. However, Magic Software is 1.91 times more volatile than Air Canada. It trades about 0.09 of its potential returns per unit of risk. Air Canada is currently generating about 0.12 per unit of risk. If you would invest 1,100 in Magic Software Enterprises on September 14, 2024 and sell it today you would earn a total of 60.00 from holding Magic Software Enterprises or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Magic Software Enterprises vs. Air Canada
Performance |
| Timeline |
| Magic Software Enter |
| Air Canada |
Magic Software and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Air Canada
The main advantage of trading using opposite Magic Software and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| Magic Software vs. Palo Alto Networks | Magic Software vs. HubSpot | Magic Software vs. Superior Plus Corp | Magic Software vs. SIVERS SEMICONDUCTORS AB |
| Air Canada vs. MAGNUM MINING EXP | Air Canada vs. CHIBA BANK | Air Canada vs. Zijin Mining Group | Air Canada vs. REVO INSURANCE SPA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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