Correlation Between Cadence Design and Global Net
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on Cadence Design and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Global Net.
Diversification Opportunities for Cadence Design and Global Net
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cadence and Global is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Cadence Design i.e., Cadence Design and Global Net go up and down completely randomly.
Pair Corralation between Cadence Design and Global Net
Given the investment horizon of 90 days Cadence Design Systems is expected to under-perform the Global Net. In addition to that, Cadence Design is 2.62 times more volatile than Global Net Lease. It trades about -0.29 of its total potential returns per unit of risk. Global Net Lease is currently generating about -0.1 per unit of volatility. If you would invest 2,316 in Global Net Lease on November 29, 2024 and sell it today you would lose (48.00) from holding Global Net Lease or give up 2.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Global Net Lease
Performance |
| Timeline |
| Cadence Design Systems |
| Global Net Lease |
Cadence Design and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Global Net
The main advantage of trading using opposite Cadence Design and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
| Global Net vs. WK Kellogg Co | Global Net vs. China Resources Beer | Global Net vs. Keurig Dr Pepper | Global Net vs. Thai Beverage PCL |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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