Correlation Between Cadence Design and Games Workshop
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Games Workshop 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 Games Workshop 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 Games Workshop Group, you can compare the effects of market volatilities on Cadence Design and Games Workshop 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 Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Games Workshop.
Diversification Opportunities for Cadence Design and Games Workshop
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cadence and Games is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group 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 Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Cadence Design i.e., Cadence Design and Games Workshop go up and down completely randomly.
Pair Corralation between Cadence Design and Games Workshop
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 0.55 times more return on investment than Games Workshop. However, Cadence Design Systems is 1.81 times less risky than Games Workshop. It trades about 0.05 of its potential returns per unit of risk. Games Workshop Group is currently generating about -0.28 per unit of risk. If you would invest 30,441 in Cadence Design Systems on October 23, 2024 and sell it today you would earn a total of 371.00 from holding Cadence Design Systems or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Cadence Design Systems vs. Games Workshop Group
Performance |
| Timeline |
| Cadence Design Systems |
| Games Workshop Group |
Cadence Design and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Games Workshop
The main advantage of trading using opposite Cadence Design and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Games Workshop 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 Games Workshop will offset losses from the drop in Games Workshop's long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
| Games Workshop vs. OneSpaWorld Holdings | Games Workshop vs. Johnson Outdoors | Games Workshop vs. Escalade Incorporated | Games Workshop vs. JAKKS Pacific |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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