Correlation Between Matrix and Magic Software
Can any of the company-specific risk be diversified away by investing in both Matrix and Magic Software 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 Matrix and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matrix and Magic Software Enterprises, you can compare the effects of market volatilities on Matrix and Magic Software 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 Matrix with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matrix and Magic Software.
Diversification Opportunities for Matrix and Magic Software
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Matrix and Magic is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Matrix and Magic Software Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Software Enter and Matrix 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 Matrix are associated (or correlated) with Magic Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Software Enter has no effect on the direction of Matrix i.e., Matrix and Magic Software go up and down completely randomly.
Pair Corralation between Matrix and Magic Software
Assuming the 90 days trading horizon Matrix is expected to generate 0.69 times more return on investment than Magic Software. However, Matrix is 1.45 times less risky than Magic Software. It trades about 0.05 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about -0.01 per unit of risk. If you would invest 653,768 in Matrix on August 29, 2024 and sell it today you would earn a total of 173,032 from holding Matrix or generate 26.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matrix vs. Magic Software Enterprises
Performance |
| Timeline |
| Matrix |
| Magic Software Enter |
Matrix and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matrix and Magic Software
The main advantage of trading using opposite Matrix and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matrix position performs unexpectedly, Magic Software 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 Magic Software will offset losses from the drop in Magic Software's long position.| Matrix vs. Automatic Bank Services | Matrix vs. EN Shoham Business | Matrix vs. Rapac Communication Infrastructure | Matrix vs. Tadiran Hldg |
| Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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