Correlation Between Cadence Design and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Harmony Gold 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 Harmony Gold 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 Harmony Gold Mining, you can compare the effects of market volatilities on Cadence Design and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Harmony Gold.
Diversification Opportunities for Cadence Design and Harmony Gold
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cadence and Harmony is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Cadence Design i.e., Cadence Design and Harmony Gold go up and down completely randomly.
Pair Corralation between Cadence Design and Harmony Gold
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 0.49 times more return on investment than Harmony Gold. However, Cadence Design Systems is 2.03 times less risky than Harmony Gold. It trades about 0.3 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.21 per unit of risk. If you would invest 27,612 in Cadence Design Systems on September 1, 2024 and sell it today you would earn a total of 3,069 from holding Cadence Design Systems or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Harmony Gold Mining
Performance |
| Timeline |
| Cadence Design Systems |
| Harmony Gold Mining |
Cadence Design and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Harmony Gold
The main advantage of trading using opposite Cadence Design and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
| Harmony Gold vs. AngloGold Ashanti plc | Harmony Gold vs. Eldorado Gold Corp | Harmony Gold vs. Kinross Gold | Harmony Gold vs. Pan American Silver |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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