Correlation Between Cadence Design and Aspen Insurance
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Aspen Insurance 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 Aspen Insurance 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 Aspen Insurance Holdings, you can compare the effects of market volatilities on Cadence Design and Aspen Insurance 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 Aspen Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Aspen Insurance.
Diversification Opportunities for Cadence Design and Aspen Insurance
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cadence and Aspen is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Aspen Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Insurance Holdings 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 Aspen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Insurance Holdings has no effect on the direction of Cadence Design i.e., Cadence Design and Aspen Insurance go up and down completely randomly.
Pair Corralation between Cadence Design and Aspen Insurance
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 1.31 times more return on investment than Aspen Insurance. However, Cadence Design is 1.31 times more volatile than Aspen Insurance Holdings. It trades about 0.07 of its potential returns per unit of risk. Aspen Insurance Holdings is currently generating about 0.04 per unit of risk. If you would invest 16,547 in Cadence Design Systems on September 4, 2024 and sell it today you would earn a total of 14,480 from holding Cadence Design Systems or generate 87.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Aspen Insurance Holdings
Performance |
| Timeline |
| Cadence Design Systems |
| Aspen Insurance Holdings |
Cadence Design and Aspen Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Aspen Insurance
The main advantage of trading using opposite Cadence Design and Aspen Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Aspen Insurance 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 Aspen Insurance will offset losses from the drop in Aspen Insurance's long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
| Aspen Insurance vs. Aspen Insurance Holdings | Aspen Insurance vs. Selective Insurance Group | Aspen Insurance vs. The Allstate | Aspen Insurance vs. AmTrust Financial Services |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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