Correlation Between MAGIC SOFTWARE and Alaska Air
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Alaska Air 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 Alaska Air 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 Alaska Air Group, you can compare the effects of market volatilities on MAGIC SOFTWARE and Alaska Air 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Alaska Air.
Diversification Opportunities for MAGIC SOFTWARE and Alaska Air
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MAGIC and Alaska is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Alaska Air go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and Alaska Air
Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 1.86 times less return on investment than Alaska Air. In addition to that, MAGIC SOFTWARE is 1.15 times more volatile than Alaska Air Group. It trades about 0.19 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.41 per unit of volatility. If you would invest 6,198 in Alaska Air Group on November 5, 2024 and sell it today you would earn a total of 864.00 from holding Alaska Air Group or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. Alaska Air Group
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| Alaska Air Group |
MAGIC SOFTWARE and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and Alaska Air
The main advantage of trading using opposite MAGIC SOFTWARE and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| MAGIC SOFTWARE vs. COLUMBIA SPORTSWEAR | MAGIC SOFTWARE vs. USWE SPORTS AB | MAGIC SOFTWARE vs. UNIQA INSURANCE GR | MAGIC SOFTWARE vs. REVO INSURANCE SPA |
| Alaska Air vs. ANTA SPORTS PRODUCT | Alaska Air vs. LG Display Co | Alaska Air vs. COLUMBIA SPORTSWEAR | Alaska Air vs. ARISTOCRAT LEISURE |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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