Correlation Between Cadence Design and Canada Goose
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Canada Goose 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 Canada Goose 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 Canada Goose Holdings, you can compare the effects of market volatilities on Cadence Design and Canada Goose 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 Canada Goose. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Canada Goose.
Diversification Opportunities for Cadence Design and Canada Goose
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cadence and Canada is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Canada Goose Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Goose Holdings 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 Canada Goose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Goose Holdings has no effect on the direction of Cadence Design i.e., Cadence Design and Canada Goose go up and down completely randomly.
Pair Corralation between Cadence Design and Canada Goose
Given the investment horizon of 90 days Cadence Design Systems is expected to under-perform the Canada Goose. But the stock apears to be less risky and, when comparing its historical volatility, Cadence Design Systems is 1.61 times less risky than Canada Goose. The stock trades about -0.32 of its potential returns per unit of risk. The Canada Goose Holdings is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,095 in Canada Goose Holdings on December 2, 2024 and sell it today you would lose (73.00) from holding Canada Goose Holdings or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Canada Goose Holdings
Performance |
| Timeline |
| Cadence Design Systems |
| Canada Goose Holdings |
Cadence Design and Canada Goose Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Canada Goose
The main advantage of trading using opposite Cadence Design and Canada Goose positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Canada Goose 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 Canada Goose will offset losses from the drop in Canada Goose's long position.| Cadence Design vs. Workday | ||
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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