Correlation Between KVH Industries and Cadence Design
Can any of the company-specific risk be diversified away by investing in both KVH Industries 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 KVH Industries and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KVH Industries and Cadence Design Systems, you can compare the effects of market volatilities on KVH Industries 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 KVH Industries with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and Cadence Design.
Diversification Opportunities for KVH Industries and Cadence Design
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KVH and Cadence is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries 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 KVH Industries 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 KVH Industries 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 KVH Industries i.e., KVH Industries and Cadence Design go up and down completely randomly.
Pair Corralation between KVH Industries and Cadence Design
Given the investment horizon of 90 days KVH Industries is expected to generate 1.19 times more return on investment than Cadence Design. However, KVH Industries is 1.19 times more volatile than Cadence Design Systems. It trades about 0.44 of its potential returns per unit of risk. Cadence Design Systems is currently generating about 0.25 per unit of risk. If you would invest 460.00 in KVH Industries on September 2, 2024 and sell it today you would earn a total of 91.00 from holding KVH Industries or generate 19.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KVH Industries vs. Cadence Design Systems
Performance |
| Timeline |
| KVH Industries |
| Cadence Design Systems |
KVH Industries and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KVH Industries and Cadence Design
The main advantage of trading using opposite KVH Industries and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries 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.| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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