Correlation Between Cadence Design and American Lithium
Can any of the company-specific risk be diversified away by investing in both Cadence Design and American Lithium 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 American Lithium 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 American Lithium Corp, you can compare the effects of market volatilities on Cadence Design and American Lithium 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 American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and American Lithium.
Diversification Opportunities for Cadence Design and American Lithium
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cadence and American is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp 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 American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Cadence Design i.e., Cadence Design and American Lithium go up and down completely randomly.
Pair Corralation between Cadence Design and American Lithium
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 0.4 times more return on investment than American Lithium. However, Cadence Design Systems is 2.48 times less risky than American Lithium. It trades about 0.24 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.1 per unit of risk. If you would invest 28,934 in Cadence Design Systems on September 5, 2024 and sell it today you would earn a total of 2,391 from holding Cadence Design Systems or generate 8.26% 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. American Lithium Corp
Performance |
| Timeline |
| Cadence Design Systems |
| American Lithium Corp |
Cadence Design and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and American Lithium
The main advantage of trading using opposite Cadence Design and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, American Lithium 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 American Lithium will offset losses from the drop in American Lithium's long position.| Cadence Design vs. HeartCore Enterprises | Cadence Design vs. Beamr Imaging Ltd | Cadence Design vs. Trust Stamp | Cadence Design vs. CXApp Inc |
| American Lithium vs. Where Food Comes | American Lithium vs. Cadence Design Systems | American Lithium vs. Vestis | American Lithium vs. Asure Software |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |