Correlation Between Cadence Design and NIP Group
Can any of the company-specific risk be diversified away by investing in both Cadence Design and NIP Group 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 NIP Group 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 NIP Group American, you can compare the effects of market volatilities on Cadence Design and NIP Group 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 NIP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and NIP Group.
Diversification Opportunities for Cadence Design and NIP Group
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cadence and NIP is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and NIP Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIP Group American 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 NIP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIP Group American has no effect on the direction of Cadence Design i.e., Cadence Design and NIP Group go up and down completely randomly.
Pair Corralation between Cadence Design and NIP Group
Given the investment horizon of 90 days Cadence Design is expected to generate 25.1 times less return on investment than NIP Group. But when comparing it to its historical volatility, Cadence Design Systems is 1.17 times less risky than NIP Group. It trades about 0.02 of its potential returns per unit of risk. NIP Group American is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 550.00 in NIP Group American on September 14, 2024 and sell it today you would earn a total of 168.00 from holding NIP Group American or generate 30.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. NIP Group American
Performance |
| Timeline |
| Cadence Design Systems |
| NIP Group American |
Cadence Design and NIP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and NIP Group
The main advantage of trading using opposite Cadence Design and NIP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, NIP Group 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 NIP Group will offset losses from the drop in NIP Group's long position.| Cadence Design vs. Dave Warrants | Cadence Design vs. Swvl Holdings Corp | Cadence Design vs. Guardforce AI Co | Cadence Design vs. Thayer Ventures Acquisition |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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