Correlation Between MAGIC SOFTWARE and SILICON LABORATOR
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and SILICON LABORATOR 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 SILICON LABORATOR 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 SILICON LABORATOR, you can compare the effects of market volatilities on MAGIC SOFTWARE and SILICON LABORATOR 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 SILICON LABORATOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and SILICON LABORATOR.
Diversification Opportunities for MAGIC SOFTWARE and SILICON LABORATOR
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MAGIC and SILICON is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and SILICON LABORATOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SILICON LABORATOR 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 SILICON LABORATOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SILICON LABORATOR has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and SILICON LABORATOR go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and SILICON LABORATOR
Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 1.14 times less return on investment than SILICON LABORATOR. But when comparing it to its historical volatility, MAGIC SOFTWARE ENTR is 1.06 times less risky than SILICON LABORATOR. It trades about 0.14 of its potential returns per unit of risk. SILICON LABORATOR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 10,400 in SILICON LABORATOR on October 24, 2024 and sell it today you would earn a total of 2,700 from holding SILICON LABORATOR or generate 25.96% 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. SILICON LABORATOR
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| SILICON LABORATOR |
MAGIC SOFTWARE and SILICON LABORATOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and SILICON LABORATOR
The main advantage of trading using opposite MAGIC SOFTWARE and SILICON LABORATOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, SILICON LABORATOR 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 SILICON LABORATOR will offset losses from the drop in SILICON LABORATOR's long position.| MAGIC SOFTWARE vs. Entravision Communications | MAGIC SOFTWARE vs. T MOBILE US | MAGIC SOFTWARE vs. OFFICE DEPOT | MAGIC SOFTWARE vs. Cairo Communication SpA |
| SILICON LABORATOR vs. UPDATE SOFTWARE | SILICON LABORATOR vs. Virtu Financial | SILICON LABORATOR vs. CDN IMPERIAL BANK | SILICON LABORATOR vs. MAGIC SOFTWARE ENTR |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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