Correlation Between Cadence Design and Dine Brands
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Dine Brands 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 Dine Brands 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 Dine Brands Global, you can compare the effects of market volatilities on Cadence Design and Dine Brands 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 Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Dine Brands.
Diversification Opportunities for Cadence Design and Dine Brands
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cadence and Dine is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global 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 Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of Cadence Design i.e., Cadence Design and Dine Brands go up and down completely randomly.
Pair Corralation between Cadence Design and Dine Brands
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 0.79 times more return on investment than Dine Brands. However, Cadence Design Systems is 1.26 times less risky than Dine Brands. It trades about 0.03 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.03 per unit of risk. If you would invest 27,025 in Cadence Design Systems on September 14, 2024 and sell it today you would earn a total of 3,650 from holding Cadence Design Systems or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Dine Brands Global
Performance |
| Timeline |
| Cadence Design Systems |
| Dine Brands Global |
Cadence Design and Dine Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Dine Brands
The main advantage of trading using opposite Cadence Design and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Dine Brands 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 Dine Brands will offset losses from the drop in Dine Brands' long position.| Cadence Design vs. Dave Warrants | Cadence Design vs. Swvl Holdings Corp | Cadence Design vs. Guardforce AI Co | Cadence Design vs. Thayer Ventures Acquisition |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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