Correlation Between MAGIC SOFTWARE and UNIVERSAL MUSIC
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and UNIVERSAL MUSIC 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 UNIVERSAL MUSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAGIC SOFTWARE ENTR and UNIVERSAL MUSIC GROUP, you can compare the effects of market volatilities on MAGIC SOFTWARE and UNIVERSAL MUSIC 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 UNIVERSAL MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and UNIVERSAL MUSIC.
Diversification Opportunities for MAGIC SOFTWARE and UNIVERSAL MUSIC
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAGIC and UNIVERSAL is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and UNIVERSAL MUSIC GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL MUSIC GROUP 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 ENTR are associated (or correlated) with UNIVERSAL MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL MUSIC GROUP has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and UNIVERSAL MUSIC go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and UNIVERSAL MUSIC
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 2.18 times more return on investment than UNIVERSAL MUSIC. However, MAGIC SOFTWARE is 2.18 times more volatile than UNIVERSAL MUSIC GROUP. It trades about 0.12 of its potential returns per unit of risk. UNIVERSAL MUSIC GROUP is currently generating about 0.05 per unit of risk. If you would invest 1,037 in MAGIC SOFTWARE ENTR on October 16, 2024 and sell it today you would earn a total of 123.00 from holding MAGIC SOFTWARE ENTR or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. UNIVERSAL MUSIC GROUP
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| UNIVERSAL MUSIC GROUP |
MAGIC SOFTWARE and UNIVERSAL MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and UNIVERSAL MUSIC
The main advantage of trading using opposite MAGIC SOFTWARE and UNIVERSAL MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, UNIVERSAL MUSIC 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 UNIVERSAL MUSIC will offset losses from the drop in UNIVERSAL MUSIC's long position.| MAGIC SOFTWARE vs. BANKINTER ADR 2007 | MAGIC SOFTWARE vs. JSC Halyk bank | MAGIC SOFTWARE vs. National Beverage Corp | MAGIC SOFTWARE vs. THAI BEVERAGE |
| UNIVERSAL MUSIC vs. MAGIC SOFTWARE ENTR | UNIVERSAL MUSIC vs. Sqs Software Quality | UNIVERSAL MUSIC vs. Commercial Vehicle Group | UNIVERSAL MUSIC vs. SK TELECOM TDADR |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |