Correlation Between MAGIC SOFTWARE and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Grand Canyon 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 Grand Canyon 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 Grand Canyon Education, you can compare the effects of market volatilities on MAGIC SOFTWARE and Grand Canyon 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 Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Grand Canyon.
Diversification Opportunities for MAGIC SOFTWARE and Grand Canyon
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAGIC and Grand is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Grand Canyon go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and Grand Canyon
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 1.9 times more return on investment than Grand Canyon. However, MAGIC SOFTWARE is 1.9 times more volatile than Grand Canyon Education. It trades about 0.11 of its potential returns per unit of risk. Grand Canyon Education is currently generating about -0.08 per unit of risk. If you would invest 1,050 in MAGIC SOFTWARE ENTR on September 12, 2024 and sell it today you would earn a total of 70.00 from holding MAGIC SOFTWARE ENTR or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. Grand Canyon Education
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| Grand Canyon Education |
MAGIC SOFTWARE and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and Grand Canyon
The main advantage of trading using opposite MAGIC SOFTWARE and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, Grand Canyon 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 Grand Canyon will offset losses from the drop in Grand Canyon's long position.| MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc |
| Grand Canyon vs. TYSON FOODS A | Grand Canyon vs. FAST RETAIL ADR | Grand Canyon vs. The Trade Desk | Grand Canyon vs. Moneysupermarket Group PLC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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