Correlation Between East Africa and Cadence Design
Can any of the company-specific risk be diversified away by investing in both East Africa and Cadence Design 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 East Africa and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and Cadence Design Systems, you can compare the effects of market volatilities on East Africa and Cadence Design 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 East Africa with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Cadence Design.
Diversification Opportunities for East Africa and Cadence Design
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between East and Cadence is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems and East Africa 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 East Africa Metals are associated (or correlated) with Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of East Africa i.e., East Africa and Cadence Design go up and down completely randomly.
Pair Corralation between East Africa and Cadence Design
Assuming the 90 days horizon East Africa Metals is expected to generate 34.91 times more return on investment than Cadence Design. However, East Africa is 34.91 times more volatile than Cadence Design Systems. It trades about 0.09 of its potential returns per unit of risk. Cadence Design Systems is currently generating about 0.07 per unit of risk. If you would invest 7.91 in East Africa Metals on September 2, 2024 and sell it today you would earn a total of 3.09 from holding East Africa Metals or generate 39.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
East Africa Metals vs. Cadence Design Systems
Performance |
| Timeline |
| East Africa Metals |
| Cadence Design Systems |
East Africa and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and Cadence Design
The main advantage of trading using opposite East Africa and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa position performs unexpectedly, Cadence Design 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 Cadence Design will offset losses from the drop in Cadence Design's long position.| East Africa vs. Pasinex Resources Limited | East Africa vs. Commander Resources | East Africa vs. Forsys Metals Corp | East Africa vs. American CuMo Mining |
| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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