Correlation Between Cadence Design and Agnico Eagle
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Agnico Eagle 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 Agnico Eagle 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 Agnico Eagle Mines, you can compare the effects of market volatilities on Cadence Design and Agnico Eagle 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 Agnico Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Agnico Eagle.
Diversification Opportunities for Cadence Design and Agnico Eagle
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cadence and Agnico is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Agnico Eagle Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agnico Eagle Mines 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 Agnico Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agnico Eagle Mines has no effect on the direction of Cadence Design i.e., Cadence Design and Agnico Eagle go up and down completely randomly.
Pair Corralation between Cadence Design and Agnico Eagle
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 0.81 times more return on investment than Agnico Eagle. However, Cadence Design Systems is 1.23 times less risky than Agnico Eagle. It trades about 0.12 of its potential returns per unit of risk. Agnico Eagle Mines is currently generating about -0.09 per unit of risk. If you would invest 29,000 in Cadence Design Systems on August 31, 2024 and sell it today you would earn a total of 1,468 from holding Cadence Design Systems or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Agnico Eagle Mines
Performance |
| Timeline |
| Cadence Design Systems |
| Agnico Eagle Mines |
Cadence Design and Agnico Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Agnico Eagle
The main advantage of trading using opposite Cadence Design and Agnico Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Agnico Eagle 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 Agnico Eagle will offset losses from the drop in Agnico Eagle's long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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