Correlation Between Live Ventures and Cadence Design
Can any of the company-specific risk be diversified away by investing in both Live Ventures 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 Live Ventures and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Ventures and Cadence Design Systems, you can compare the effects of market volatilities on Live Ventures 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 Live Ventures with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Ventures and Cadence Design.
Diversification Opportunities for Live Ventures and Cadence Design
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Live and Cadence is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures 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 Live Ventures 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 Live Ventures 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 Live Ventures i.e., Live Ventures and Cadence Design go up and down completely randomly.
Pair Corralation between Live Ventures and Cadence Design
Given the investment horizon of 90 days Live Ventures is expected to under-perform the Cadence Design. In addition to that, Live Ventures is 1.92 times more volatile than Cadence Design Systems. It trades about -0.05 of its total potential returns per unit of risk. Cadence Design Systems is currently generating about 0.16 per unit of volatility. If you would invest 28,445 in Cadence Design Systems on August 30, 2024 and sell it today you would earn a total of 2,023 from holding Cadence Design Systems or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Ventures vs. Cadence Design Systems
Performance |
| Timeline |
| Live Ventures |
| Cadence Design Systems |
Live Ventures and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Ventures and Cadence Design
The main advantage of trading using opposite Live Ventures and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Ventures 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.| Live Ventures vs. Arhaus Inc | Live Ventures vs. Floor Decor Holdings | Live Ventures vs. Haverty Furniture Companies | Live Ventures vs. Kingfisher plc |
| Cadence Design vs. C3 Ai Inc | Cadence Design vs. Shopify | Cadence Design vs. Workday | Cadence Design vs. Intuit Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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