Correlation Between Umpqua Holdings and Cadence Design
Can any of the company-specific risk be diversified away by investing in both Umpqua Holdings 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 Umpqua Holdings and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Umpqua Holdings and Cadence Design Systems, you can compare the effects of market volatilities on Umpqua Holdings 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 Umpqua Holdings with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Umpqua Holdings and Cadence Design.
Diversification Opportunities for Umpqua Holdings and Cadence Design
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Umpqua and Cadence is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Umpqua Holdings 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 Umpqua Holdings 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 Umpqua Holdings 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 Umpqua Holdings i.e., Umpqua Holdings and Cadence Design go up and down completely randomly.
Pair Corralation between Umpqua Holdings and Cadence Design
Given the investment horizon of 90 days Umpqua Holdings is expected to generate 2.45 times less return on investment than Cadence Design. But when comparing it to its historical volatility, Umpqua Holdings is 1.25 times less risky than Cadence Design. It trades about 0.04 of its potential returns per unit of risk. Cadence Design Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 16,005 in Cadence Design Systems on September 14, 2024 and sell it today you would earn a total of 14,817 from holding Cadence Design Systems or generate 92.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 9.11% |
| Values | Daily Returns |
Umpqua Holdings vs. Cadence Design Systems
Performance |
| Timeline |
| Umpqua Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cadence Design Systems |
Umpqua Holdings and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Umpqua Holdings and Cadence Design
The main advantage of trading using opposite Umpqua Holdings and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Umpqua Holdings 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.| Umpqua Holdings vs. Nexstar Broadcasting Group | Umpqua Holdings vs. Ihuman Inc | Umpqua Holdings vs. American Airlines Group | Umpqua Holdings vs. Saia Inc |
| Cadence Design vs. Dave Warrants | Cadence Design vs. Swvl Holdings Corp | Cadence Design vs. Guardforce AI Co | Cadence Design vs. Thayer Ventures Acquisition |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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