Correlation Between Magic Software and Bannerman Resources
Can any of the company-specific risk be diversified away by investing in both Magic Software and Bannerman Resources 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 Bannerman Resources 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 Bannerman Resources Limited, you can compare the effects of market volatilities on Magic Software and Bannerman Resources 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 Bannerman Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Bannerman Resources.
Diversification Opportunities for Magic Software and Bannerman Resources
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magic and Bannerman is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Bannerman Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bannerman Resources 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 Bannerman Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bannerman Resources has no effect on the direction of Magic Software i.e., Magic Software and Bannerman Resources go up and down completely randomly.
Pair Corralation between Magic Software and Bannerman Resources
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 1.25 times more return on investment than Bannerman Resources. However, Magic Software is 1.25 times more volatile than Bannerman Resources Limited. It trades about 0.21 of its potential returns per unit of risk. Bannerman Resources Limited is currently generating about 0.03 per unit of risk. If you would invest 1,040 in Magic Software Enterprises on September 13, 2024 and sell it today you would earn a total of 150.00 from holding Magic Software Enterprises or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. Bannerman Resources Limited
Performance |
| Timeline |
| Magic Software Enter |
| Bannerman Resources |
Magic Software and Bannerman Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Bannerman Resources
The main advantage of trading using opposite Magic Software and Bannerman Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Bannerman Resources 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 Bannerman Resources will offset losses from the drop in Bannerman Resources' long position.| Magic Software vs. Palo Alto Networks | Magic Software vs. HubSpot | Magic Software vs. Superior Plus Corp | Magic Software vs. SIVERS SEMICONDUCTORS AB |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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