Correlation Between Cadence Design and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Cadence Design and KVH Industries 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 KVH Industries 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 KVH Industries, you can compare the effects of market volatilities on Cadence Design and KVH Industries 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 KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and KVH Industries.
Diversification Opportunities for Cadence Design and KVH Industries
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cadence and KVH is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Cadence Design i.e., Cadence Design and KVH Industries go up and down completely randomly.
Pair Corralation between Cadence Design and KVH Industries
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 0.7 times more return on investment than KVH Industries. However, Cadence Design Systems is 1.43 times less risky than KVH Industries. It trades about 0.06 of its potential returns per unit of risk. KVH Industries is currently generating about -0.04 per unit of risk. If you would invest 20,403 in Cadence Design Systems on August 31, 2024 and sell it today you would earn a total of 10,065 from holding Cadence Design Systems or generate 49.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. KVH Industries
Performance |
| Timeline |
| Cadence Design Systems |
| KVH Industries |
Cadence Design and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and KVH Industries
The main advantage of trading using opposite Cadence Design and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |