Correlation Between Microsoft and MAGIC SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and MAGIC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and MAGIC SOFTWARE ENTR, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of MAGIC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and MAGIC SOFTWARE.
Diversification Opportunities for Microsoft and MAGIC SOFTWARE
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and MAGIC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and MAGIC SOFTWARE ENTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGIC SOFTWARE ENTR and Microsoft 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 Microsoft 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 ENTR has no effect on the direction of Microsoft i.e., Microsoft and MAGIC SOFTWARE go up and down completely randomly.
Pair Corralation between Microsoft and MAGIC SOFTWARE
Assuming the 90 days trading horizon Microsoft is expected to under-perform the MAGIC SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.14 times less risky than MAGIC SOFTWARE. The stock trades about -0.02 of its potential returns per unit of risk. The MAGIC SOFTWARE ENTR is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,625 in MAGIC SOFTWARE ENTR on September 8, 2025 and sell it today you would earn a total of 495.00 from holding MAGIC SOFTWARE ENTR or generate 30.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. MAGIC SOFTWARE ENTR
Performance |
| Timeline |
| Microsoft |
| MAGIC SOFTWARE ENTR |
Microsoft and MAGIC SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and MAGIC SOFTWARE
The main advantage of trading using opposite Microsoft and MAGIC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. USWE SPORTS AB | Microsoft vs. NAKED WINES PLC | Microsoft vs. BW OFFSHORE LTD | Microsoft vs. CSSC Offshore Marine |
| MAGIC SOFTWARE vs. NorAm Drilling AS | MAGIC SOFTWARE vs. Treasury Wine Estates | MAGIC SOFTWARE vs. Scottish Mortgage Investment | MAGIC SOFTWARE vs. MidCap Financial Investment |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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