Correlation Between Scotts Miracle-Gro and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Scotts Miracle-Gro 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 Scotts Miracle-Gro and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Scotts Miracle Gro and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on Scotts Miracle-Gro 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 Scotts Miracle-Gro with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotts Miracle-Gro and MAGIC SOFTWARE.
Diversification Opportunities for Scotts Miracle-Gro and MAGIC SOFTWARE
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Scotts and MAGIC is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding The Scotts Miracle Gro 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 Scotts Miracle-Gro 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 The Scotts Miracle Gro 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 Scotts Miracle-Gro i.e., Scotts Miracle-Gro and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between Scotts Miracle-Gro and MAGIC SOFTWARE
Assuming the 90 days trading horizon The Scotts Miracle Gro is expected to generate 1.09 times more return on investment than MAGIC SOFTWARE. However, Scotts Miracle-Gro is 1.09 times more volatile than MAGIC SOFTWARE ENTR. It trades about 0.04 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.02 per unit of risk. If you would invest 5,268 in The Scotts Miracle Gro on September 4, 2024 and sell it today you would earn a total of 1,994 from holding The Scotts Miracle Gro or generate 37.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Scotts Miracle Gro vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| Scotts Miracle-Gro |
| MAGIC SOFTWARE ENTR |
Scotts Miracle-Gro and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scotts Miracle-Gro and MAGIC SOFTWARE
The main advantage of trading using opposite Scotts Miracle-Gro and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotts Miracle-Gro 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.| Scotts Miracle-Gro vs. Corteva | Scotts Miracle-Gro vs. Corteva | Scotts Miracle-Gro vs. Nutrien | Scotts Miracle-Gro vs. The Mosaic |
| MAGIC SOFTWARE vs. Consolidated Communications Holdings | MAGIC SOFTWARE vs. EIDESVIK OFFSHORE NK | MAGIC SOFTWARE vs. Spirent Communications plc | MAGIC SOFTWARE vs. Citic Telecom International |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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