Correlation Between Arad Investment and Magic Software
Can any of the company-specific risk be diversified away by investing in both Arad Investment 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 Arad Investment and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arad Investment Industrial and Magic Software Enterprises, you can compare the effects of market volatilities on Arad Investment 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 Arad Investment with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and Magic Software.
Diversification Opportunities for Arad Investment and Magic Software
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arad and Magic is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial 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 Arad Investment 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 Arad Investment Industrial 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 Arad Investment i.e., Arad Investment and Magic Software go up and down completely randomly.
Pair Corralation between Arad Investment and Magic Software
Assuming the 90 days trading horizon Arad Investment Industrial is expected to generate 1.65 times more return on investment than Magic Software. However, Arad Investment is 1.65 times more volatile than Magic Software Enterprises. It trades about 0.08 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.0 per unit of risk. If you would invest 1,340,000 in Arad Investment Industrial on December 2, 2024 and sell it today you would earn a total of 137,000 from holding Arad Investment Industrial or generate 10.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Arad Investment Industrial vs. Magic Software Enterprises
Performance |
Timeline |
Arad Investment Indu |
Magic Software Enter |
Arad Investment and Magic Software Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Arad Investment and Magic Software
The main advantage of trading using opposite Arad Investment and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arad Investment 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.Arad Investment vs. Arad | Arad Investment vs. Alony Hetz Properties | Arad Investment vs. Danel | Arad Investment vs. Airport City |
Magic Software vs. Sapiens International | Magic Software vs. AudioCodes | Magic Software vs. Matrix | Magic Software vs. Tower Semiconductor |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |