Correlation Between Cadence Design and JJill
Can any of the company-specific risk be diversified away by investing in both Cadence Design and JJill 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 JJill 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 JJill Inc, you can compare the effects of market volatilities on Cadence Design and JJill 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 JJill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and JJill.
Diversification Opportunities for Cadence Design and JJill
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cadence and JJill is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc 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 JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Cadence Design i.e., Cadence Design and JJill go up and down completely randomly.
Pair Corralation between Cadence Design and JJill
Given the investment horizon of 90 days Cadence Design Systems is expected to under-perform the JJill. In addition to that, Cadence Design is 1.54 times more volatile than JJill Inc. It trades about -0.21 of its total potential returns per unit of risk. JJill Inc is currently generating about -0.27 per unit of volatility. If you would invest 2,772 in JJill Inc on November 28, 2024 and sell it today you would lose (278.00) from holding JJill Inc or give up 10.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. JJill Inc
Performance |
| Timeline |
| Cadence Design Systems |
| JJill Inc |
Cadence Design and JJill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and JJill
The main advantage of trading using opposite Cadence Design and JJill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, JJill 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 JJill will offset losses from the drop in JJill's long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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