Correlation Between Quaker Chemical and Magic Software
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical 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 Quaker Chemical and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and Magic Software Enterprises, you can compare the effects of market volatilities on Quaker Chemical 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 Quaker Chemical with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Magic Software.
Diversification Opportunities for Quaker Chemical and Magic Software
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Quaker and Magic is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical i.e., Quaker Chemical and Magic Software go up and down completely randomly.
Pair Corralation between Quaker Chemical and Magic Software
Assuming the 90 days horizon Quaker Chemical is expected to generate 1.27 times more return on investment than Magic Software. However, Quaker Chemical is 1.27 times more volatile than Magic Software Enterprises. It trades about 0.15 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.08 per unit of risk. If you would invest 14,200 in Quaker Chemical on August 29, 2024 and sell it today you would earn a total of 1,500 from holding Quaker Chemical or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Quaker Chemical vs. Magic Software Enterprises
Performance |
| Timeline |
| Quaker Chemical |
| Magic Software Enter |
Quaker Chemical and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and Magic Software
The main advantage of trading using opposite Quaker Chemical and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical 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.| Quaker Chemical vs. Linde plc | Quaker Chemical vs. Superior Plus Corp | Quaker Chemical vs. NMI Holdings | Quaker Chemical vs. SIVERS SEMICONDUCTORS AB |
| Magic Software vs. Palo Alto Networks | Magic Software vs. Superior Plus Corp | Magic Software vs. NMI Holdings | Magic Software vs. SIVERS SEMICONDUCTORS AB |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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