Correlation Between Magic Software and Apple
Can any of the company-specific risk be diversified away by investing in both Magic Software and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Magic Software and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Apple.
Diversification Opportunities for Magic Software and Apple
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Magic and Apple is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Magic Software i.e., Magic Software and Apple go up and down completely randomly.
Pair Corralation between Magic Software and Apple
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 2.2 times more return on investment than Apple. However, Magic Software is 2.2 times more volatile than Apple Inc. It trades about 0.07 of its potential returns per unit of risk. Apple Inc is currently generating about 0.09 per unit of risk. If you would invest 728.00 in Magic Software Enterprises on September 21, 2024 and sell it today you would earn a total of 432.00 from holding Magic Software Enterprises or generate 59.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Apple Inc
Performance |
| Timeline |
| Magic Software Enter |
| Apple Inc |
Magic Software and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Apple
The main advantage of trading using opposite Magic Software and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Magic Software vs. Palo Alto Networks | Magic Software vs. Superior Plus Corp | Magic Software vs. SIVERS SEMICONDUCTORS AB | Magic Software vs. NorAm Drilling AS |
| Apple vs. MAGIC SOFTWARE ENTR | Apple vs. CompuGroup Medical SE | Apple vs. UPDATE SOFTWARE | Apple vs. Magic Software Enterprises |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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