Correlation Between MAGIC SOFTWARE and Corporate Office
Can any of the company-specific risk be diversified away by investing in both MAGIC SOFTWARE and Corporate Office 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 Corporate Office 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 Corporate Office Properties, you can compare the effects of market volatilities on MAGIC SOFTWARE and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGIC SOFTWARE and Corporate Office.
Diversification Opportunities for MAGIC SOFTWARE and Corporate Office
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MAGIC and Corporate is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding MAGIC SOFTWARE ENTR and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of MAGIC SOFTWARE i.e., MAGIC SOFTWARE and Corporate Office go up and down completely randomly.
Pair Corralation between MAGIC SOFTWARE and Corporate Office
Assuming the 90 days trading horizon MAGIC SOFTWARE ENTR is expected to generate 2.23 times more return on investment than Corporate Office. However, MAGIC SOFTWARE is 2.23 times more volatile than Corporate Office Properties. It trades about 0.26 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.13 per unit of risk. If you would invest 1,000.00 in MAGIC SOFTWARE ENTR on September 3, 2024 and sell it today you would earn a total of 200.00 from holding MAGIC SOFTWARE ENTR or generate 20.0% 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. Corporate Office Properties
Performance |
| Timeline |
| MAGIC SOFTWARE ENTR |
| Corporate Office Pro |
MAGIC SOFTWARE and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGIC SOFTWARE and Corporate Office
The main advantage of trading using opposite MAGIC SOFTWARE and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGIC SOFTWARE position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| MAGIC SOFTWARE vs. TOTAL GABON | MAGIC SOFTWARE vs. Walgreens Boots Alliance | MAGIC SOFTWARE vs. Peak Resources Limited |
| Corporate Office vs. BRIT AMER TOBACCO | Corporate Office vs. Entravision Communications | Corporate Office vs. QBE Insurance Group | Corporate Office vs. Universal Display |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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