Correlation Between Cadence Design and Impac Mortgage
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Impac Mortgage 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 Impac Mortgage 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 Impac Mortgage Holdings, you can compare the effects of market volatilities on Cadence Design and Impac Mortgage 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 Impac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Impac Mortgage.
Diversification Opportunities for Cadence Design and Impac Mortgage
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cadence and Impac is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Impac Mortgage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impac Mortgage 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 Impac Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impac Mortgage Holdings has no effect on the direction of Cadence Design i.e., Cadence Design and Impac Mortgage go up and down completely randomly.
Pair Corralation between Cadence Design and Impac Mortgage
Given the investment horizon of 90 days Cadence Design is expected to generate 16.17 times less return on investment than Impac Mortgage. But when comparing it to its historical volatility, Cadence Design Systems is 9.16 times less risky than Impac Mortgage. It trades about 0.04 of its potential returns per unit of risk. Impac Mortgage Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Impac Mortgage Holdings on September 12, 2024 and sell it today you would lose (3.00) from holding Impac Mortgage Holdings or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Impac Mortgage Holdings
Performance |
| Timeline |
| Cadence Design Systems |
| Impac Mortgage Holdings |
Cadence Design and Impac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Impac Mortgage
The main advantage of trading using opposite Cadence Design and Impac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Impac Mortgage 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 Impac Mortgage will offset losses from the drop in Impac Mortgage's long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
| Impac Mortgage vs. Cadence Design Systems | Impac Mortgage vs. Regeneron Pharmaceuticals | Impac Mortgage vs. CDW Corp | Impac Mortgage vs. SmartStop Self Storage |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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