Correlation Between Cadence Design and Grab Holdings
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Grab Holdings 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 Grab Holdings 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 Grab Holdings, you can compare the effects of market volatilities on Cadence Design and Grab Holdings 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 Grab Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Grab Holdings.
Diversification Opportunities for Cadence Design and Grab Holdings
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cadence and Grab is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Grab Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grab 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 Grab Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grab Holdings has no effect on the direction of Cadence Design i.e., Cadence Design and Grab Holdings go up and down completely randomly.
Pair Corralation between Cadence Design and Grab Holdings
Given the investment horizon of 90 days Cadence Design is expected to generate 1.11 times less return on investment than Grab Holdings. But when comparing it to its historical volatility, Cadence Design Systems is 1.27 times less risky than Grab Holdings. It trades about 0.05 of its potential returns per unit of risk. Grab Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 321.00 in Grab Holdings on November 19, 2024 and sell it today you would earn a total of 169.00 from holding Grab Holdings or generate 52.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Grab Holdings
Performance |
| Timeline |
| Cadence Design Systems |
| Grab Holdings |
Cadence Design and Grab Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Grab Holdings
The main advantage of trading using opposite Cadence Design and Grab Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Grab Holdings 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 Grab Holdings will offset losses from the drop in Grab Holdings' long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
| Grab Holdings vs. LYFT Inc | Grab Holdings vs. Kingsoft Cloud Holdings | Grab Holdings vs. AMTD Digital | Grab Holdings vs. Uber Technologies |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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