Correlation Between SEALED AIR and Magic Software
Can any of the company-specific risk be diversified away by investing in both SEALED AIR 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 SEALED AIR and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and Magic Software Enterprises, you can compare the effects of market volatilities on SEALED AIR 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 SEALED AIR with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and Magic Software.
Diversification Opportunities for SEALED AIR and Magic Software
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SEALED and Magic is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR 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 SEALED AIR 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 SEALED AIR 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 SEALED AIR i.e., SEALED AIR and Magic Software go up and down completely randomly.
Pair Corralation between SEALED AIR and Magic Software
Assuming the 90 days trading horizon SEALED AIR is expected to generate 3.76 times less return on investment than Magic Software. But when comparing it to its historical volatility, SEALED AIR is 1.47 times less risky than Magic Software. It trades about 0.04 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,010 in Magic Software Enterprises on August 30, 2024 and sell it today you would earn a total of 50.00 from holding Magic Software Enterprises or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SEALED AIR vs. Magic Software Enterprises
Performance |
| Timeline |
| SEALED AIR |
| Magic Software Enter |
SEALED AIR and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and Magic Software
The main advantage of trading using opposite SEALED AIR and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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.| SEALED AIR vs. Marie Brizard Wine | SEALED AIR vs. CDN IMPERIAL BANK | SEALED AIR vs. ITALIAN WINE BRANDS | SEALED AIR vs. VIRGIN WINES UK |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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