Correlation Between Magic Empire and Bank of New York
Can any of the company-specific risk be diversified away by investing in both Magic Empire and Bank of New York 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 Magic Empire and Bank of New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magic Empire Global and Bank of New, you can compare the effects of market volatilities on Magic Empire and Bank of New York 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 Magic Empire with a short position of Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Empire and Bank of New York.
Diversification Opportunities for Magic Empire and Bank of New York
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magic and Bank is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Magic Empire Global and Bank of New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York and Magic Empire 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 Magic Empire Global are associated (or correlated) with Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Magic Empire i.e., Magic Empire and Bank of New York go up and down completely randomly.
Pair Corralation between Magic Empire and Bank of New York
Given the investment horizon of 90 days Magic Empire Global is expected to generate 4.52 times more return on investment than Bank of New York. However, Magic Empire is 4.52 times more volatile than Bank of New. It trades about 0.11 of its potential returns per unit of risk. Bank of New is currently generating about 0.18 per unit of risk. If you would invest 63.00 in Magic Empire Global on February 17, 2024 and sell it today you would earn a total of 11.49 from holding Magic Empire Global or generate 18.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Magic Empire Global vs. Bank of New
Performance |
Timeline |
Magic Empire Global |
Bank of New York |
Magic Empire and Bank of New York Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magic Empire and Bank of New York
The main advantage of trading using opposite Magic Empire and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Empire position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York's long position.Magic Empire vs. Raymond James Financial | Magic Empire vs. The Charles Schwab | Magic Empire vs. The Charles Schwab | Magic Empire vs. BGC Group |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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