Correlation Between Cadence Design and Amgen
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Amgen 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 Amgen 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 Amgen Inc, you can compare the effects of market volatilities on Cadence Design and Amgen 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 Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Amgen.
Diversification Opportunities for Cadence Design and Amgen
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cadence and Amgen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Cadence Design i.e., Cadence Design and Amgen go up and down completely randomly.
Pair Corralation between Cadence Design and Amgen
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 1.68 times more return on investment than Amgen. However, Cadence Design is 1.68 times more volatile than Amgen Inc. It trades about 0.03 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.03 per unit of risk. If you would invest 28,713 in Cadence Design Systems on September 2, 2024 and sell it today you would earn a total of 1,968 from holding Cadence Design Systems or generate 6.85% 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. Amgen Inc
Performance |
| Timeline |
| Cadence Design Systems |
| Amgen Inc |
Cadence Design and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Amgen
The main advantage of trading using opposite Cadence Design and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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