Correlation Between Magic Software and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Magic Software and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on Magic Software and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and SLR Investment.
Diversification Opportunities for Magic Software and SLR Investment
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magic and SLR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Magic Software i.e., Magic Software and SLR Investment go up and down completely randomly.
Pair Corralation between Magic Software and SLR Investment
Assuming the 90 days horizon Magic Software Enterprises is expected to under-perform the SLR Investment. In addition to that, Magic Software is 1.89 times more volatile than SLR Investment Corp. It trades about -0.26 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.0 per unit of volatility. If you would invest 1,620 in SLR Investment Corp on December 8, 2024 and sell it today you would lose (2.00) from holding SLR Investment Corp or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. SLR Investment Corp
Performance |
| Timeline |
| Magic Software Enter |
| SLR Investment Corp |
Magic Software and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and SLR Investment
The main advantage of trading using opposite Magic Software and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Magic Software vs. SERI INDUSTRIAL EO | Magic Software vs. Ribbon Communications | Magic Software vs. Harmony Gold Mining | Magic Software vs. Yuexiu Transport Infrastructure |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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