Correlation Between Cadence Design and Dave Busters
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Dave Busters 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 Dave Busters 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 Dave Busters Entertainment, you can compare the effects of market volatilities on Cadence Design and Dave Busters 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 Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Dave Busters.
Diversification Opportunities for Cadence Design and Dave Busters
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cadence and Dave is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta 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 Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of Cadence Design i.e., Cadence Design and Dave Busters go up and down completely randomly.
Pair Corralation between Cadence Design and Dave Busters
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 0.44 times more return on investment than Dave Busters. However, Cadence Design Systems is 2.26 times less risky than Dave Busters. It trades about 0.3 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about 0.1 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Dave Busters Entertainment
Performance |
| Timeline |
| Cadence Design Systems |
| Dave Busters Enterta |
Cadence Design and Dave Busters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Dave Busters
The main advantage of trading using opposite Cadence Design and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Dave Busters 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 Dave Busters will offset losses from the drop in Dave Busters' long position.| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
| Dave Busters vs. The Wendys Co | Dave Busters vs. Shake Shack | Dave Busters vs. Papa Johns International | Dave Busters vs. Darden Restaurants |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |