Correlation Between MAGIC SOFTWARE and Calibre Mining
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Calibre Mining 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 Calibre Mining 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 Calibre Mining Corp, you can compare the effects of market volatilities on MAGIC SOFTWARE and Calibre Mining 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 Calibre Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Calibre Mining.
Diversification Opportunities for MAGIC SOFTWARE and Calibre Mining
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between MAGIC and Calibre is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining 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 Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Calibre Mining go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and Calibre Mining
Assuming the 90 days trading horizon MAGIC SOFTWARE is expected to generate 1.7 times less return on investment than Calibre Mining. But when comparing it to its historical volatility, MAGIC SOFTWARE ENTR is 1.09 times less risky than Calibre Mining. It trades about 0.06 of its potential returns per unit of risk. Calibre Mining Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 124.00 in Calibre Mining Corp on September 12, 2024 and sell it today you would earn a total of 41.00 from holding Calibre Mining Corp or generate 33.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGIC SOFTWARE ENTR vs. Calibre Mining Corp
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| Calibre Mining Corp |
MAGIC SOFTWARE and Calibre Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and Calibre Mining
The main advantage of trading using opposite MAGIC SOFTWARE and Calibre Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, Calibre Mining 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 Calibre Mining will offset losses from the drop in Calibre Mining's long position.| MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc |
| Calibre Mining vs. Apple Inc | Calibre Mining vs. Apple Inc | Calibre Mining vs. Apple Inc | Calibre Mining 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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