Correlation Between Corporate Office and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Corporate Office 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 Corporate Office and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on Corporate Office 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 Corporate Office with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and MAGIC SOFTWARE.
Diversification Opportunities for Corporate Office and MAGIC SOFTWARE
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Corporate and MAGIC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties 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 Corporate Office 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 Corporate Office Properties 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 Corporate Office i.e., Corporate Office and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between Corporate Office and MAGIC SOFTWARE
Assuming the 90 days horizon Corporate Office is expected to generate 1.08 times less return on investment than MAGIC SOFTWARE. But when comparing it to its historical volatility, Corporate Office Properties is 1.85 times less risky than MAGIC SOFTWARE. It trades about 0.12 of its potential returns per unit of risk. MAGIC SOFTWARE ENTR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 830.00 in MAGIC SOFTWARE ENTR on September 4, 2024 and sell it today you would earn a total of 340.00 from holding MAGIC SOFTWARE ENTR or generate 40.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Corporate Office Properties vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| Corporate Office Pro |
| MAGIC SOFTWARE ENTR |
Corporate Office and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and MAGIC SOFTWARE
The main advantage of trading using opposite Corporate Office and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office 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.| Corporate Office vs. SL Green Realty | Corporate Office vs. Superior Plus Corp | Corporate Office vs. NMI Holdings | Corporate Office vs. Origin Agritech |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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