Correlation Between Stifel Financial and Magic Empire

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

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

Diversification Opportunities for Stifel Financial and Magic Empire

0.15

Correlation Coefficient

Stifel Financial  Magic Empire

Average diversification

The 3 months correlation between Stifel and Magic is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial and Magic Empire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Empire Global and Stifel Financial 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 Stifel Financial are associated (or correlated) with Magic Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Empire Global has no effect on the direction of Stifel Financial i.e., Stifel Financial and Magic Empire go up and down completely randomly.

Pair Corralation between Stifel Financial and Magic Empire

Allowing for the 90-day total investment horizon Stifel Financial is expected to generate 0.39 times more return on investment than Magic Empire. However, Stifel Financial is 2.55 times less risky than Magic Empire. It trades about -0.18 of its potential returns per unit of risk. Magic Empire Global is currently generating about -0.31 per unit of risk. If you would invest  11,623  in Stifel Financial on November 19, 2024 and sell it today you would lose (586.00) from holding Stifel Financial or give up 5.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Stifel Financial  vs.  Magic Empire Global

Stifel Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stifel Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Stifel Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Magic Empire Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Empire Global are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Magic Empire disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stifel Financial and Magic Empire

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

The idea behind Stifel Financial and Magic Empire Global 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.