Correlation Between Teva Pharmaceutical and Magic Software
Can any of the company-specific risk be diversified away by investing in both Teva Pharmaceutical 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 Teva Pharmaceutical and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teva Pharmaceutical Industries and Magic Software Enterprises, you can compare the effects of market volatilities on Teva Pharmaceutical 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 Teva Pharmaceutical with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharmaceutical and Magic Software.
Diversification Opportunities for Teva Pharmaceutical and Magic Software
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teva and Magic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharmaceutical Industries 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 Teva Pharmaceutical 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 Teva Pharmaceutical Industries 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 Teva Pharmaceutical i.e., Teva Pharmaceutical and Magic Software go up and down completely randomly.
Pair Corralation between Teva Pharmaceutical and Magic Software
Assuming the 90 days horizon Teva Pharmaceutical Industries is expected to under-perform the Magic Software. In addition to that, Teva Pharmaceutical is 1.11 times more volatile than Magic Software Enterprises. It trades about -0.14 of its total potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.26 per unit of volatility. If you would invest 1,110 in Magic Software Enterprises on October 28, 2024 and sell it today you would earn a total of 100.00 from holding Magic Software Enterprises or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teva Pharmaceutical Industries vs. Magic Software Enterprises
Performance |
| Timeline |
| Teva Pharmaceutical |
| Magic Software Enter |
Teva Pharmaceutical and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teva Pharmaceutical and Magic Software
The main advantage of trading using opposite Teva Pharmaceutical and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharmaceutical 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.| Teva Pharmaceutical vs. Applied Materials | Teva Pharmaceutical vs. Summit Materials | Teva Pharmaceutical vs. International Consolidated Airlines | Teva Pharmaceutical vs. VULCAN MATERIALS |
| Magic Software vs. Information Services International Dentsu | Magic Software vs. Pure Storage | Magic Software vs. Teradata Corp | Magic Software vs. MAGNUM MINING EXP |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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