Correlation Between MAGIC SOFTWARE and Synovus Financial
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Synovus Financial 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 Synovus Financial 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 Synovus Financial Corp, you can compare the effects of market volatilities on MAGIC SOFTWARE and Synovus Financial 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 Synovus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Synovus Financial.
Diversification Opportunities for MAGIC SOFTWARE and Synovus Financial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAGIC and Synovus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Synovus Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synovus Financial Corp 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 Synovus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synovus Financial Corp has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Synovus Financial go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and Synovus Financial
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 1.04 times more return on investment than Synovus Financial. However, MAGIC SOFTWARE is 1.04 times more volatile than Synovus Financial Corp. It trades about 0.23 of its potential returns per unit of risk. Synovus Financial Corp is currently generating about 0.22 per unit of risk. If you would invest 1,090 in MAGIC SOFTWARE ENTR on October 30, 2024 and sell it today you would earn a total of 90.00 from holding MAGIC SOFTWARE ENTR or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. Synovus Financial Corp
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| Synovus Financial Corp |
MAGIC SOFTWARE and Synovus Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and Synovus Financial
The main advantage of trading using opposite MAGIC SOFTWARE and Synovus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, Synovus Financial 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 Synovus Financial will offset losses from the drop in Synovus Financial's long position.| MAGIC SOFTWARE vs. Plastic Omnium | MAGIC SOFTWARE vs. LG Display Co | MAGIC SOFTWARE vs. Universal Display | MAGIC SOFTWARE vs. NEWELL RUBBERMAID |
| Synovus Financial vs. Apple Inc | Synovus Financial vs. Apple Inc | Synovus Financial vs. Apple Inc | Synovus Financial 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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