Correlation Between Cadence Design and Jeld Wen

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

Diversification Opportunities for Cadence Design and Jeld Wen

-0.84

Correlation Coefficient

Cadence Design  Jeld Wen

Pay attention - limited upside

The 3 months correlation between Cadence and Jeld is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding 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 Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of Cadence Design i.e., Cadence Design and Jeld Wen go up and down completely randomly.

Pair Corralation between Cadence Design and Jeld Wen

Given the investment horizon of 90 days Cadence Design Systems is expected to generate 0.65 times more return on investment than Jeld Wen. However, Cadence Design Systems is 1.55 times less risky than Jeld Wen. It trades about 0.0 of its potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.06 per unit of risk. If you would invest  30,933  in Cadence Design Systems on September 24, 2024 and sell it today you would lose (786.00) from holding Cadence Design Systems or give up 2.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cadence Design Systems  vs.  Jeld Wen Holding

Cadence Design Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Design Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Cadence Design may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jeld Wen Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeld Wen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cadence Design and Jeld Wen

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

The idea behind Cadence Design Systems and Jeld Wen Holding 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.