Correlation Between Magic Software and Canadian Tire

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

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

Diversification Opportunities for Magic Software and Canadian Tire

0.0

Correlation Coefficient

Magic Software  Canadian Tire

Pay attention - limited upside

The 3 months correlation between Magic and Canadian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and Canadian Tire Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Tire Corp and Magic Software 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 Magic Software Enterprises are associated (or correlated) with Canadian Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Tire Corp has no effect on the direction of Magic Software i.e., Magic Software and Canadian Tire go up and down completely randomly.

Pair Corralation between Magic Software and Canadian Tire

If you would invest  979.00  in Magic Software Enterprises on October 9, 2024 and sell it today you would earn a total of  151.00  from holding Magic Software Enterprises or generate 15.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Magic Software Enterprises  vs.  Canadian Tire Corp

Magic Software Enter

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Software Enterprises are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Magic Software reported solid returns over the last few months and may actually be approaching a breakup point.

Canadian Tire Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Tire Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canadian Tire is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Magic Software and Canadian Tire

The main advantage of trading using opposite Magic Software and Canadian Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, Canadian Tire 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 Canadian Tire will offset losses from the drop in Canadian Tire's long position.

The idea behind Magic Software Enterprises and Canadian Tire Corp 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..