Correlation Between MAGIC SOFTWARE and BROADPEAK
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and BROADPEAK 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 BROADPEAK 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 BROADPEAK SA EO, you can compare the effects of market volatilities on MAGIC SOFTWARE and BROADPEAK 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 BROADPEAK. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and BROADPEAK.
Diversification Opportunities for MAGIC SOFTWARE and BROADPEAK
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAGIC and BROADPEAK is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and BROADPEAK SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADPEAK SA EO 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 BROADPEAK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADPEAK SA EO has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and BROADPEAK go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and BROADPEAK
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 1.35 times more return on investment than BROADPEAK. However, MAGIC SOFTWARE is 1.35 times more volatile than BROADPEAK SA EO. It trades about 0.02 of its potential returns per unit of risk. BROADPEAK SA EO is currently generating about -0.07 per unit of risk. If you would invest 1,174 in MAGIC SOFTWARE ENTR on October 30, 2024 and sell it today you would earn a total of 6.00 from holding MAGIC SOFTWARE ENTR or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. BROADPEAK SA EO
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| BROADPEAK SA EO |
MAGIC SOFTWARE and BROADPEAK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and BROADPEAK
The main advantage of trading using opposite MAGIC SOFTWARE and BROADPEAK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, BROADPEAK 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 BROADPEAK will offset losses from the drop in BROADPEAK's long position.| MAGIC SOFTWARE vs. Plastic Omnium | MAGIC SOFTWARE vs. LG Display Co | MAGIC SOFTWARE vs. Universal Display | MAGIC SOFTWARE vs. NEWELL RUBBERMAID |
| BROADPEAK vs. CHIBA BANK | BROADPEAK vs. Virtu Financial | BROADPEAK vs. Fevertree Drinks PLC | BROADPEAK vs. Synchrony Financial |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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