Correlation Between MAGIC SOFTWARE and Avnet
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Avnet 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 Avnet 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 Avnet Inc, you can compare the effects of market volatilities on MAGIC SOFTWARE and Avnet 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 Avnet. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Avnet.
Diversification Opportunities for MAGIC SOFTWARE and Avnet
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAGIC and Avnet is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Avnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avnet Inc 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 Avnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avnet Inc has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Avnet go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and Avnet
Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 14.7 times less return on investment than Avnet. In addition to that, MAGIC SOFTWARE is 1.77 times more volatile than Avnet Inc. It trades about 0.0 of its total potential returns per unit of risk. Avnet Inc is currently generating about 0.04 per unit of volatility. If you would invest 3,906 in Avnet Inc on September 3, 2024 and sell it today you would earn a total of 1,194 from holding Avnet Inc or generate 30.57% 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. Avnet Inc
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| Avnet Inc |
MAGIC SOFTWARE and Avnet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and Avnet
The main advantage of trading using opposite MAGIC SOFTWARE and Avnet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, Avnet 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 Avnet will offset losses from the drop in Avnet's long position.| MAGIC SOFTWARE vs. TOTAL GABON | MAGIC SOFTWARE vs. Walgreens Boots Alliance | MAGIC SOFTWARE vs. Peak Resources Limited |
| Avnet vs. NXP Semiconductors NV | Avnet vs. MAGIC SOFTWARE ENTR | Avnet vs. BJs Restaurants | Avnet vs. Guidewire Software |
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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