Correlation Between Dover and Magic Software
Can any of the company-specific risk be diversified away by investing in both Dover 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 Dover and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dover and Magic Software Enterprises, you can compare the effects of market volatilities on Dover 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 Dover with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dover and Magic Software.
Diversification Opportunities for Dover and Magic Software
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dover and Magic is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dover 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 Dover 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 Dover 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 Dover i.e., Dover and Magic Software go up and down completely randomly.
Pair Corralation between Dover and Magic Software
Considering the 90-day investment horizon Dover is expected to generate 2.62 times less return on investment than Magic Software. But when comparing it to its historical volatility, Dover is 1.54 times less risky than Magic Software. It trades about 0.1 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,971 in Magic Software Enterprises on September 9, 2025 and sell it today you would earn a total of 544.00 from holding Magic Software Enterprises or generate 27.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dover vs. Magic Software Enterprises
Performance |
| Timeline |
| Dover |
| Magic Software Enter |
Dover and Magic Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dover and Magic Software
The main advantage of trading using opposite Dover and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dover 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 Dover 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.| Magic Software vs. Taskus Inc | Magic Software vs. NETGEAR | Magic Software vs. ScanSource | Magic Software vs. Cantaloupe |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |