Correlation Between MAGIC SOFTWARE and OAKTRSPECLENDNEW
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW, you can compare the effects of market volatilities on MAGIC SOFTWARE and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and OAKTRSPECLENDNEW.
Diversification Opportunities for MAGIC SOFTWARE and OAKTRSPECLENDNEW
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MAGIC and OAKTRSPECLENDNEW is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and OAKTRSPECLENDNEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OAKTRSPECLENDNEW has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and OAKTRSPECLENDNEW go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and OAKTRSPECLENDNEW
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 1.51 times more return on investment than OAKTRSPECLENDNEW. However, MAGIC SOFTWARE is 1.51 times more volatile than OAKTRSPECLENDNEW. It trades about 0.06 of its potential returns per unit of risk. OAKTRSPECLENDNEW is currently generating about -0.02 per unit of risk. If you would invest 1,030 in MAGIC SOFTWARE ENTR on August 28, 2024 and sell it today you would earn a total of 30.00 from holding MAGIC SOFTWARE ENTR or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. OAKTRSPECLENDNEW
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| OAKTRSPECLENDNEW |
MAGIC SOFTWARE and OAKTRSPECLENDNEW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and OAKTRSPECLENDNEW
The main advantage of trading using opposite MAGIC SOFTWARE and OAKTRSPECLENDNEW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW will offset losses from the drop in OAKTRSPECLENDNEW's long position.| MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Microsoft |
| OAKTRSPECLENDNEW vs. Apple Inc | OAKTRSPECLENDNEW vs. Apple Inc | OAKTRSPECLENDNEW vs. Apple Inc | OAKTRSPECLENDNEW 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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