Correlation Between Cadence Design and Artisan Partners

Can any of the company-specific risk be diversified away by investing in both Cadence Design and Artisan Partners 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 Cadence Design and Artisan Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cadence Design Systems and Artisan Partners Asset, you can compare the effects of market volatilities on Cadence Design and Artisan Partners 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 Cadence Design with a short position of Artisan Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Artisan Partners.

Diversification Opportunities for Cadence Design and Artisan Partners

0.31

Correlation Coefficient

Cadence Design  Artisan Partners

Weak diversification

The 3 months correlation between Cadence and Artisan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset and Cadence Design 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 Cadence Design Systems are associated (or correlated) with Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of Cadence Design i.e., Cadence Design and Artisan Partners go up and down completely randomly.

Pair Corralation between Cadence Design and Artisan Partners

Given the investment horizon of 90 days Cadence Design Systems is expected to under-perform the Artisan Partners. In addition to that, Cadence Design is 1.38 times more volatile than Artisan Partners Asset. It trades about -0.09 of its total potential returns per unit of risk. Artisan Partners Asset is currently generating about -0.03 per unit of volatility. If you would invest  4,190  in Artisan Partners Asset on December 29, 2024 and sell it today you would lose (162.00) from holding Artisan Partners Asset or give up 3.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cadence Design Systems  vs.  Artisan Partners Asset

Cadence Design Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadence Design Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Artisan Partners Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Partners Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cadence Design and Artisan Partners

The main advantage of trading using opposite Cadence Design and Artisan Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Artisan Partners 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 Artisan Partners will offset losses from the drop in Artisan Partners' long position.

The idea behind Cadence Design Systems and Artisan Partners Asset pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.