Correlation Between INFORMATION SVC and Magic Software
Can any of the company-specific risk be diversified away by investing in both INFORMATION SVC 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 INFORMATION SVC and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INFORMATION SVC GRP and Magic Software Enterprises, you can compare the effects of market volatilities on INFORMATION SVC 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 INFORMATION SVC with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and Magic Software.
Diversification Opportunities for INFORMATION SVC and Magic Software
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INFORMATION and Magic is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP 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 INFORMATION SVC 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 INFORMATION SVC GRP 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 INFORMATION SVC i.e., INFORMATION SVC and Magic Software go up and down completely randomly.
Pair Corralation between INFORMATION SVC and Magic Software
Assuming the 90 days horizon INFORMATION SVC GRP is expected to generate 0.92 times more return on investment than Magic Software. However, INFORMATION SVC GRP is 1.09 times less risky than Magic Software. It trades about 0.17 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.13 per unit of risk. If you would invest 278.00 in INFORMATION SVC GRP on September 13, 2024 and sell it today you would earn a total of 70.00 from holding INFORMATION SVC GRP or generate 25.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INFORMATION SVC GRP vs. Magic Software Enterprises
Performance |
| Timeline |
| INFORMATION SVC GRP |
| Magic Software Enter |
INFORMATION SVC and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INFORMATION SVC and Magic Software
The main advantage of trading using opposite INFORMATION SVC and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC 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.| INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Apple Inc |
| Magic Software vs. Palo Alto Networks | Magic Software vs. HubSpot | Magic Software vs. Superior Plus Corp | 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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