Correlation Between Cadence Design and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Eidesvik Offshore 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 Eidesvik Offshore 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 Eidesvik Offshore ASA, you can compare the effects of market volatilities on Cadence Design and Eidesvik Offshore 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 Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Eidesvik Offshore.
Diversification Opportunities for Cadence Design and Eidesvik Offshore
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cadence and Eidesvik is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of Cadence Design i.e., Cadence Design and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Cadence Design and Eidesvik Offshore
Assuming the 90 days horizon Cadence Design Systems is expected to generate 1.06 times more return on investment than Eidesvik Offshore. However, Cadence Design is 1.06 times more volatile than Eidesvik Offshore ASA. It trades about 0.1 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about -0.09 per unit of risk. If you would invest 22,140 in Cadence Design Systems on November 3, 2024 and sell it today you would earn a total of 6,865 from holding Cadence Design Systems or generate 31.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadence Design Systems vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| Cadence Design Systems |
| Eidesvik Offshore ASA |
Cadence Design and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadence Design and Eidesvik Offshore
The main advantage of trading using opposite Cadence Design and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Eidesvik Offshore 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.| Cadence Design vs. ANGLO ASIAN MINING | Cadence Design vs. Singapore Airlines Limited | Cadence Design vs. Southwest Airlines Co | Cadence Design vs. GALENA MINING LTD |
| Eidesvik Offshore vs. Altair Engineering | Eidesvik Offshore vs. CONTAGIOUS GAMING INC | Eidesvik Offshore vs. RYANAIR HLDGS ADR | Eidesvik Offshore vs. Boyd Gaming |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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