Correlation Between PICKN PAY and Cadence Design
Can any of the company-specific risk be diversified away by investing in both PICKN PAY 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 PICKN PAY and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PICKN PAY STORES and Cadence Design Systems, you can compare the effects of market volatilities on PICKN PAY 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 PICKN PAY with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICKN PAY and Cadence Design.
Diversification Opportunities for PICKN PAY and Cadence Design
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PICKN and Cadence is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PICKN PAY STORES 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 PICKN PAY 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 PICKN PAY STORES 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 PICKN PAY i.e., PICKN PAY and Cadence Design go up and down completely randomly.
Pair Corralation between PICKN PAY and Cadence Design
Assuming the 90 days trading horizon PICKN PAY STORES is expected to generate 0.67 times more return on investment than Cadence Design. However, PICKN PAY STORES is 1.5 times less risky than Cadence Design. It trades about -0.26 of its potential returns per unit of risk. Cadence Design Systems is currently generating about -0.45 per unit of risk. If you would invest 149.00 in PICKN PAY STORES on December 8, 2024 and sell it today you would lose (14.00) from holding PICKN PAY STORES or give up 9.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PICKN PAY STORES vs. Cadence Design Systems
Performance |
| Timeline |
| PICKN PAY STORES |
| Cadence Design Systems |
PICKN PAY and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PICKN PAY and Cadence Design
The main advantage of trading using opposite PICKN PAY and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PICKN PAY 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.| PICKN PAY vs. Q2M Managementberatung AG | ||
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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