Correlation Between Aerodrome and Magic Software
Can any of the company-specific risk be diversified away by investing in both Aerodrome 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 Aerodrome and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerodrome Group and Magic Software Enterprises, you can compare the effects of market volatilities on Aerodrome 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 Aerodrome with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerodrome and Magic Software.
Diversification Opportunities for Aerodrome and Magic Software
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aerodrome and Magic is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aerodrome Group 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 Aerodrome 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 Aerodrome Group 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 Aerodrome i.e., Aerodrome and Magic Software go up and down completely randomly.
Pair Corralation between Aerodrome and Magic Software
Assuming the 90 days trading horizon Aerodrome Group is expected to generate 2.69 times more return on investment than Magic Software. However, Aerodrome is 2.69 times more volatile than Magic Software Enterprises. It trades about 0.16 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.02 per unit of risk. If you would invest 7,670 in Aerodrome Group on January 25, 2024 and sell it today you would earn a total of 1,000.00 from holding Aerodrome Group or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerodrome Group vs. Magic Software Enterprises
Performance |
| Timeline |
| Aerodrome Group |
| Magic Software Enter |
Aerodrome and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerodrome and Magic Software
The main advantage of trading using opposite Aerodrome and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerodrome 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.| Aerodrome vs. Bank Leumi Le Israel | Aerodrome vs. Teva Pharmaceutical Industries | Aerodrome vs. Bank Hapoalim | Aerodrome vs. Elbit Systems |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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