Correlation Between Cadence Design and Jaws Hurricane

Can any of the company-specific risk be diversified away by investing in both Cadence Design and Jaws Hurricane 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 Jaws Hurricane 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 Jaws Hurricane Acquisition, you can compare the effects of market volatilities on Cadence Design and Jaws Hurricane 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 Jaws Hurricane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Jaws Hurricane.

Diversification Opportunities for Cadence Design and Jaws Hurricane

-0.72

Correlation Coefficient

Cadence Design  Jaws Hurricane

Pay attention - limited upside

The 3 months correlation between Cadence and Jaws is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Jaws Hurricane Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaws Hurricane Acqui 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 Jaws Hurricane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaws Hurricane Acqui has no effect on the direction of Cadence Design i.e., Cadence Design and Jaws Hurricane go up and down completely randomly.

Pair Corralation between Cadence Design and Jaws Hurricane

Given the investment horizon of 90 days Cadence Design is expected to generate 6.06 times less return on investment than Jaws Hurricane. But when comparing it to its historical volatility, Cadence Design Systems is 14.81 times less risky than Jaws Hurricane. It trades about 0.08 of its potential returns per unit of risk. Jaws Hurricane Acquisition is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Jaws Hurricane Acquisition on September 16, 2024 and sell it today you would lose (15.90) from holding Jaws Hurricane Acquisition or give up 99.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	18.35%
Values	Daily Returns

Cadence Design Systems  vs.  Jaws Hurricane Acquisition

Cadence Design Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Design Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Cadence Design unveiled solid returns over the last few months and may actually be approaching a breakup point.

Jaws Hurricane Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaws Hurricane Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Jaws Hurricane is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cadence Design and Jaws Hurricane

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

The idea behind Cadence Design Systems and Jaws Hurricane Acquisition 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.