Correlation Between Vulcan Materials and Magic Software
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials 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 Vulcan Materials and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Magic Software Enterprises, you can compare the effects of market volatilities on Vulcan Materials 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 Vulcan Materials with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Magic Software.
Diversification Opportunities for Vulcan Materials and Magic Software
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vulcan and Magic is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials i.e., Vulcan Materials and Magic Software go up and down completely randomly.
Pair Corralation between Vulcan Materials and Magic Software
Assuming the 90 days horizon Vulcan Materials is expected to under-perform the Magic Software. But the stock apears to be less risky and, when comparing its historical volatility, Vulcan Materials is 1.2 times less risky than Magic Software. The stock trades about -0.25 of its potential returns per unit of risk. The Magic Software Enterprises is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,116 in Magic Software Enterprises on October 16, 2024 and sell it today you would lose (6.00) from holding Magic Software Enterprises or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. Magic Software Enterprises
Performance |
| Timeline |
| Vulcan Materials |
| Magic Software Enter |
Vulcan Materials and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Magic Software
The main advantage of trading using opposite Vulcan Materials and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials 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.| Vulcan Materials vs. ZINC MEDIA GR | Vulcan Materials vs. IMAGIN MEDICAL INC | Vulcan Materials vs. Ubisoft Entertainment SA | Vulcan Materials vs. PARKEN Sport Entertainment |
| Magic Software vs. Materialise NV | Magic Software vs. Hyster Yale Materials Handling | Magic Software vs. Compagnie Plastic Omnium | Magic Software vs. Vulcan Materials |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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