Correlation Between Sabra Health and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Sabra Health 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 Sabra Health and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabra Health Care and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on Sabra Health 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 Sabra Health with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and MAGIC SOFTWARE.
Diversification Opportunities for Sabra Health and MAGIC SOFTWARE
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabra and MAGIC is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and MAGIC SOFTWARE ENTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGIC SOFTWARE ENTR and Sabra Health 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 Sabra Health Care 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 ENTR has no effect on the direction of Sabra Health i.e., Sabra Health and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between Sabra Health and MAGIC SOFTWARE
Assuming the 90 days horizon Sabra Health is expected to generate 8.32 times less return on investment than MAGIC SOFTWARE. But when comparing it to its historical volatility, Sabra Health Care is 1.75 times less risky than MAGIC SOFTWARE. It trades about 0.05 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,020 in MAGIC SOFTWARE ENTR on September 1, 2024 and sell it today you would earn a total of 180.00 from holding MAGIC SOFTWARE ENTR or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Health Care vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| Sabra Health Care |
| MAGIC SOFTWARE ENTR |
Sabra Health and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and MAGIC SOFTWARE
The main advantage of trading using opposite Sabra Health and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health 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.| Sabra Health vs. Hanison Construction Holdings | Sabra Health vs. UNITED UTILITIES GR | Sabra Health vs. NORTHEAST UTILITIES | Sabra Health vs. Hitachi Construction Machinery |
| MAGIC SOFTWARE vs. SIVERS SEMICONDUCTORS AB | MAGIC SOFTWARE vs. Darden Restaurants | MAGIC SOFTWARE vs. Reliance Steel Aluminum | MAGIC SOFTWARE vs. Q2M Managementberatung AG |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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