Correlation Between Widepoint and Magic Software

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

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

Diversification Opportunities for Widepoint and Magic Software

-0.53

Correlation Coefficient

Widepoint  Magic Software

Excellent diversification

The 3 months correlation between Widepoint and Magic is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Widepoint C 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 Widepoint 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 Widepoint C 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 Widepoint i.e., Widepoint and Magic Software go up and down completely randomly.

Pair Corralation between Widepoint and Magic Software

Considering the 90-day investment horizon Widepoint C is expected to under-perform the Magic Software. In addition to that, Widepoint is 1.88 times more volatile than Magic Software Enterprises. It trades about -0.06 of its total potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.1 per unit of volatility. If you would invest  1,184  in Magic Software Enterprises on December 21, 2024 and sell it today you would earn a total of  160.00  from holding Magic Software Enterprises or generate 13.51% return on investment over 90 days.

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

Widepoint C  vs.  Magic Software Enterprises

Widepoint C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Widepoint C has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Magic Software Enter

Risk-Adjusted Performance

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. In spite of rather fragile forward indicators, Magic Software exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Widepoint and Magic Software

The main advantage of trading using opposite Widepoint and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Widepoint 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 Widepoint C 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.