Correlation Between ASGN and Magic Software

Can any of the company-specific risk be diversified away by investing in both ASGN 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 ASGN and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASGN Inc and Magic Software Enterprises, you can compare the effects of market volatilities on ASGN 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 ASGN with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASGN and Magic Software.

Diversification Opportunities for ASGN and Magic Software

-0.48

Correlation Coefficient

ASGN  Magic Software

Very good diversification

The 3 months correlation between ASGN and Magic is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ASGN Inc 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 ASGN 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 ASGN Inc 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 ASGN i.e., ASGN and Magic Software go up and down completely randomly.

Pair Corralation between ASGN and Magic Software

Given the investment horizon of 90 days ASGN Inc is expected to under-perform the Magic Software. But the stock apears to be less risky and, when comparing its historical volatility, ASGN Inc is 1.3 times less risky than Magic Software. The stock trades about -0.18 of its potential returns per unit of risk. The Magic Software Enterprises is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,090  in Magic Software Enterprises on October 9, 2024 and sell it today you would earn a total of  118.00  from holding Magic Software Enterprises or generate 10.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ASGN Inc  vs.  Magic Software Enterprises

ASGN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASGN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Magic Software Enter

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Software Enterprises are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Magic Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ASGN and Magic Software

The main advantage of trading using opposite ASGN and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASGN 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.

The idea behind ASGN Inc and Magic Software Enterprises pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.