Correlation Between United Internet and Cadence Design
Can any of the company-specific risk be diversified away by investing in both United Internet and Cadence Design 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 United Internet and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and Cadence Design Systems, you can compare the effects of market volatilities on United Internet and Cadence Design 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 United Internet with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Cadence Design.
Diversification Opportunities for United Internet and Cadence Design
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Cadence is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems and United Internet 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 United Internet AG are associated (or correlated) with Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of United Internet i.e., United Internet and Cadence Design go up and down completely randomly.
Pair Corralation between United Internet and Cadence Design
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Cadence Design. But the stock apears to be less risky and, when comparing its historical volatility, United Internet AG is 1.06 times less risky than Cadence Design. The stock trades about -0.02 of its potential returns per unit of risk. The Cadence Design Systems is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 30,203 in Cadence Design Systems on October 20, 2024 and sell it today you would earn a total of 294.00 from holding Cadence Design Systems or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
United Internet AG vs. Cadence Design Systems
Performance |
| Timeline |
| United Internet AG |
| Cadence Design Systems |
United Internet and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Cadence Design
The main advantage of trading using opposite United Internet and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, Cadence Design 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 Cadence Design will offset losses from the drop in Cadence Design's long position.| United Internet vs. Ubisoft Entertainment | United Internet vs. Zinc Media Group | United Internet vs. Blackrock World Mining | United Internet vs. Atalaya Mining |
| Cadence Design vs. Walmart | Cadence Design vs. BYD Co | Cadence Design vs. Volkswagen AG | Cadence Design vs. Volkswagen AG Non Vtg |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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