Correlation Between Magic Software and Computershare
Can any of the company-specific risk be diversified away by investing in both Magic Software and Computershare 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 Computershare 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 Computershare Limited, you can compare the effects of market volatilities on Magic Software and Computershare 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 Computershare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and Computershare.
Diversification Opportunities for Magic Software and Computershare
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Magic and Computershare is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Computershare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare Limited 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 Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare Limited has no effect on the direction of Magic Software i.e., Magic Software and Computershare go up and down completely randomly.
Pair Corralation between Magic Software and Computershare
Assuming the 90 days horizon Magic Software is expected to generate 1.37 times less return on investment than Computershare. In addition to that, Magic Software is 1.35 times more volatile than Computershare Limited. It trades about 0.1 of its total potential returns per unit of risk. Computershare Limited is currently generating about 0.18 per unit of volatility. If you would invest 1,444 in Computershare Limited on November 3, 2024 and sell it today you would earn a total of 616.00 from holding Computershare Limited or generate 42.66% 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. Computershare Limited
Performance |
| Timeline |
| Magic Software Enter |
| Computershare Limited |
Magic Software and Computershare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and Computershare
The main advantage of trading using opposite Magic Software and Computershare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Computershare 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 Computershare will offset losses from the drop in Computershare's long position.| Magic Software vs. Cardinal Health | Magic Software vs. CLOVER HEALTH INV | Magic Software vs. EPSILON HEALTHCARE LTD | Magic Software vs. Siemens Healthineers AG |
| Computershare vs. Salesforce | Computershare vs. SAFEROADS HLDGS | Computershare vs. TEXAS ROADHOUSE | Computershare vs. BOS BETTER ONLINE |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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