Correlation Between ScanSource and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both ScanSource 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 ScanSource and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on ScanSource 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 ScanSource with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and MAGIC SOFTWARE.
Diversification Opportunities for ScanSource and MAGIC SOFTWARE
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ScanSource and MAGIC is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource 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 ScanSource 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 ScanSource 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 ScanSource i.e., ScanSource and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between ScanSource and MAGIC SOFTWARE
Assuming the 90 days horizon ScanSource is expected to generate 2.02 times less return on investment than MAGIC SOFTWARE. But when comparing it to its historical volatility, ScanSource is 1.67 times less risky than MAGIC SOFTWARE. It trades about 0.19 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 1,000.00 in MAGIC SOFTWARE ENTR on September 20, 2024 and sell it today you would earn a total of 160.00 from holding MAGIC SOFTWARE ENTR or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| ScanSource |
| MAGIC SOFTWARE ENTR |
ScanSource and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and MAGIC SOFTWARE
The main advantage of trading using opposite ScanSource and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource 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.| ScanSource vs. Fukuyama Transporting Co | ScanSource vs. Gold Road Resources | ScanSource vs. TEXAS ROADHOUSE | ScanSource vs. Broadridge Financial Solutions |
| MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Apple Inc | MAGIC SOFTWARE vs. Microsoft |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |