Correlation Between Endava and CEDAR

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Can any of the company-specific risk be diversified away by investing in both Endava and CEDAR 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 Endava and CEDAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endava and CEDAR FAIR L, you can compare the effects of market volatilities on Endava and CEDAR 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 Endava with a short position of CEDAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endava and CEDAR.

Diversification Opportunities for Endava and CEDAR

EndavaCEDARDiversified AwayEndavaCEDARDiversified Away100%
-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Endava and CEDAR is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Endava and CEDAR FAIR L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEDAR FAIR L and Endava 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 Endava are associated (or correlated) with CEDAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEDAR FAIR L has no effect on the direction of Endava i.e., Endava and CEDAR go up and down completely randomly.

Pair Corralation between Endava and CEDAR

Given the investment horizon of 90 days Endava is expected to under-perform the CEDAR. In addition to that, Endava is 12.54 times more volatile than CEDAR FAIR L. It trades about -0.41 of its total potential returns per unit of risk. CEDAR FAIR L is currently generating about 0.07 per unit of volatility. If you would invest  9,675  in CEDAR FAIR L on November 29, 2024 and sell it today you would earn a total of  37.00  from holding CEDAR FAIR L or generate 0.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Endava  vs.  CEDAR FAIR L

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 051015202530
JavaScript chart by amCharts 3.21.15DAVA 150190AE6
       Timeline  
Endava 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Endava has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2628303234
CEDAR FAIR L 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days CEDAR FAIR L has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CEDAR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb9494.59595.59696.59797.5

Endava and CEDAR Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.92-2.94-1.95-0.97-0.01590.921.882.843.794.75 0.51.01.52.0
JavaScript chart by amCharts 3.21.15DAVA 150190AE6
       Returns  

Pair Trading with Endava and CEDAR

The main advantage of trading using opposite Endava and CEDAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endava position performs unexpectedly, CEDAR 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 CEDAR will offset losses from the drop in CEDAR's long position.
The idea behind Endava and CEDAR FAIR L pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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