Correlation Between Flexible Solutions and Cadence Design
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions 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 Flexible Solutions and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and Cadence Design Systems, you can compare the effects of market volatilities on Flexible Solutions 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 Flexible Solutions with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Cadence Design.
Diversification Opportunities for Flexible Solutions and Cadence Design
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Flexible and Cadence is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation 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 Flexible Solutions 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 Flexible Solutions International 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 Flexible Solutions i.e., Flexible Solutions and Cadence Design go up and down completely randomly.
Pair Corralation between Flexible Solutions and Cadence Design
Considering the 90-day investment horizon Flexible Solutions International is expected to under-perform the Cadence Design. In addition to that, Flexible Solutions is 1.42 times more volatile than Cadence Design Systems. It trades about 0.0 of its total potential returns per unit of risk. Cadence Design Systems is currently generating about 0.32 per unit of volatility. If you would invest 25,277 in Cadence Design Systems on August 28, 2024 and sell it today you would earn a total of 5,962 from holding Cadence Design Systems or generate 23.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexible Solutions Internation vs. Cadence Design Systems
Performance |
| Timeline |
| Flexible Solutions |
| Cadence Design Systems |
Flexible Solutions and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and Cadence Design
The main advantage of trading using opposite Flexible Solutions and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions 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.| Flexible Solutions vs. Oil Dri | Flexible Solutions vs. H B Fuller | Flexible Solutions vs. Northern Technologies | Flexible Solutions vs. Cabot |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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