Correlation Between Cadence Design and Aspen Technology
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Aspen Technology 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 Technology 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 Technology, you can compare the effects of market volatilities on Cadence Design and Aspen Technology 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 Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Aspen Technology.
Diversification Opportunities for Cadence Design and Aspen Technology
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cadence and Aspen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Technology 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 Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Technology has no effect on the direction of Cadence Design i.e., Cadence Design and Aspen Technology go up and down completely randomly.
Pair Corralation between Cadence Design and Aspen Technology
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 3.33 times more return on investment than Aspen Technology. However, Cadence Design is 3.33 times more volatile than Aspen Technology. It trades about 0.32 of its potential returns per unit of risk. Aspen Technology is currently generating about 0.22 per unit of risk. If you would invest 25,277 in Cadence Design Systems on August 28, 2024 and sell it today you would earn a total of 5,962 from holding Cadence Design Systems or generate 23.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Aspen Technology
Performance |
| Timeline |
| Cadence Design Systems |
| Aspen Technology |
Cadence Design and Aspen Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Aspen Technology
The main advantage of trading using opposite Cadence Design and Aspen Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Aspen Technology 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 Technology will offset losses from the drop in Aspen Technology's long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
| Aspen Technology vs. Bentley Systems | Aspen Technology vs. Tyler Technologies | Aspen Technology vs. Blackbaud | Aspen Technology vs. SSC Technologies Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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