Correlation Between Magic Software and INFORMATION SVC
Can any of the company-specific risk be diversified away by investing in both Magic Software and INFORMATION SVC 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 INFORMATION SVC 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 INFORMATION SVC GRP, you can compare the effects of market volatilities on Magic Software and INFORMATION SVC 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 INFORMATION SVC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and INFORMATION SVC.
Diversification Opportunities for Magic Software and INFORMATION SVC
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magic and INFORMATION is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and INFORMATION SVC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFORMATION SVC GRP 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 INFORMATION SVC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFORMATION SVC GRP has no effect on the direction of Magic Software i.e., Magic Software and INFORMATION SVC go up and down completely randomly.
Pair Corralation between Magic Software and INFORMATION SVC
Assuming the 90 days horizon Magic Software is expected to generate 1.22 times less return on investment than INFORMATION SVC. In addition to that, Magic Software is 1.09 times more volatile than INFORMATION SVC GRP. It trades about 0.13 of its total potential returns per unit of risk. INFORMATION SVC GRP is currently generating about 0.17 per unit of volatility. If you would invest 278.00 in INFORMATION SVC GRP on September 13, 2024 and sell it today you would earn a total of 70.00 from holding INFORMATION SVC GRP or generate 25.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. INFORMATION SVC GRP
Performance |
| Timeline |
| Magic Software Enter |
| INFORMATION SVC GRP |
Magic Software and INFORMATION SVC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and INFORMATION SVC
The main advantage of trading using opposite Magic Software and INFORMATION SVC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, INFORMATION SVC 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 INFORMATION SVC will offset losses from the drop in INFORMATION SVC's long position.| Magic Software vs. Palo Alto Networks | Magic Software vs. HubSpot | Magic Software vs. Superior Plus Corp | Magic Software vs. SIVERS SEMICONDUCTORS AB |
| INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Apple Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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