Correlation Between Magic Software and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Magic Software and DFS Furniture 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 DFS Furniture 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 DFS Furniture PLC, you can compare the effects of market volatilities on Magic Software and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and DFS Furniture.
Diversification Opportunities for Magic Software and DFS Furniture
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magic and DFS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Magic Software i.e., Magic Software and DFS Furniture go up and down completely randomly.
Pair Corralation between Magic Software and DFS Furniture
Assuming the 90 days horizon Magic Software is expected to generate 1.0 times less return on investment than DFS Furniture. In addition to that, Magic Software is 1.34 times more volatile than DFS Furniture PLC. It trades about 0.12 of its total potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.17 per unit of volatility. If you would invest 143.00 in DFS Furniture PLC on September 3, 2024 and sell it today you would earn a total of 19.00 from holding DFS Furniture PLC or generate 13.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. DFS Furniture PLC
Performance |
| Timeline |
| Magic Software Enter |
| DFS Furniture PLC |
Magic Software and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and DFS Furniture
The main advantage of trading using opposite Magic Software and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. Origin Agritech | Magic Software vs. SIVERS SEMICONDUCTORS AB |
| DFS Furniture vs. ASURE SOFTWARE | DFS Furniture vs. Magic Software Enterprises | DFS Furniture vs. Axway Software SA | DFS Furniture vs. Lion Biotechnologies |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Positions Ratings 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 | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |