Correlation Between Cadence Design and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Cadence Design and AMG Advanced 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 Cadence Design and AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadence Design Systems and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Cadence Design and AMG Advanced 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 Cadence Design with a short position of AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and AMG Advanced.
Diversification Opportunities for Cadence Design and AMG Advanced
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cadence and AMG is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu and Cadence Design 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 Cadence Design Systems are associated (or correlated) with AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Cadence Design i.e., Cadence Design and AMG Advanced go up and down completely randomly.
Pair Corralation between Cadence Design and AMG Advanced
Assuming the 90 days trading horizon Cadence Design Systems is expected to generate 1.14 times more return on investment than AMG Advanced. However, Cadence Design is 1.14 times more volatile than AMG Advanced Metallurgical. It trades about 0.02 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about 0.01 per unit of risk. If you would invest 30,892 in Cadence Design Systems on September 14, 2024 and sell it today you would earn a total of 55.00 from holding Cadence Design Systems or generate 0.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Cadence Design Systems |
| AMG Advanced Metallu |
Cadence Design and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and AMG Advanced
The main advantage of trading using opposite Cadence Design and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| Cadence Design vs. Zegona Communications Plc | Cadence Design vs. Fulcrum Metals PLC | Cadence Design vs. Power Metal Resources | Cadence Design vs. United Internet AG |
| AMG Advanced vs. Induction Healthcare Group | AMG Advanced vs. Zoom Video Communications | AMG Advanced vs. MyHealthChecked Plc | AMG Advanced vs. United Internet AG |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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