Correlation Between Magic Software and SEI INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both Magic Software and SEI INVESTMENTS 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 SEI INVESTMENTS 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 SEI INVESTMENTS, you can compare the effects of market volatilities on Magic Software and SEI INVESTMENTS 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 SEI INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and SEI INVESTMENTS.
Diversification Opportunities for Magic Software and SEI INVESTMENTS
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Magic and SEI is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS 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 SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of Magic Software i.e., Magic Software and SEI INVESTMENTS go up and down completely randomly.
Pair Corralation between Magic Software and SEI INVESTMENTS
Assuming the 90 days horizon Magic Software Enterprises is expected to under-perform the SEI INVESTMENTS. In addition to that, Magic Software is 1.21 times more volatile than SEI INVESTMENTS. It trades about -0.1 of its total potential returns per unit of risk. SEI INVESTMENTS is currently generating about -0.1 per unit of volatility. If you would invest 8,150 in SEI INVESTMENTS on October 13, 2024 and sell it today you would lose (200.00) from holding SEI INVESTMENTS or give up 2.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Magic Software Enterprises vs. SEI INVESTMENTS
Performance |
Timeline |
Magic Software Enter |
SEI INVESTMENTS |
Magic Software and SEI INVESTMENTS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magic Software and SEI INVESTMENTS
The main advantage of trading using opposite Magic Software and SEI INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, SEI INVESTMENTS 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 SEI INVESTMENTS will offset losses from the drop in SEI INVESTMENTS's long position.Magic Software vs. Ribbon Communications | Magic Software vs. INTERSHOP Communications Aktiengesellschaft | Magic Software vs. Chesapeake Utilities | Magic Software vs. Entravision Communications |
SEI INVESTMENTS vs. VELA TECHNOLPLC LS 0001 | SEI INVESTMENTS vs. Magic Software Enterprises | SEI INVESTMENTS vs. PSI Software AG | SEI INVESTMENTS vs. AAC TECHNOLOGHLDGADR |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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