Correlation Between Insteel Industries and Magic Software
Can any of the company-specific risk be diversified away by investing in both Insteel Industries 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 Insteel Industries and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Magic Software Enterprises, you can compare the effects of market volatilities on Insteel Industries 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 Insteel Industries with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Magic Software.
Diversification Opportunities for Insteel Industries and Magic Software
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Insteel and Magic is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries 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 Insteel Industries 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 Insteel Industries 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 Insteel Industries i.e., Insteel Industries and Magic Software go up and down completely randomly.
Pair Corralation between Insteel Industries and Magic Software
Assuming the 90 days horizon Insteel Industries is expected to under-perform the Magic Software. In addition to that, Insteel Industries is 1.01 times more volatile than Magic Software Enterprises. It trades about -0.01 of its total potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.12 per unit of volatility. If you would invest 985.00 in Magic Software Enterprises on September 18, 2024 and sell it today you would earn a total of 165.00 from holding Magic Software Enterprises or generate 16.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Insteel Industries vs. Magic Software Enterprises
Performance |
Timeline |
Insteel Industries |
Magic Software Enter |
Insteel Industries and Magic Software Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Insteel Industries and Magic Software
The main advantage of trading using opposite Insteel Industries and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries 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.Insteel Industries vs. Goosehead Insurance | Insteel Industries vs. ADRIATIC METALS LS 013355 | Insteel Industries vs. The Hanover Insurance | Insteel Industries vs. HANOVER INSURANCE |
Magic Software vs. Palo Alto Networks | Magic Software vs. Superior Plus Corp | Magic Software vs. SIVERS SEMICONDUCTORS AB | Magic Software vs. NorAm Drilling AS |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |