Correlation Between Cadence Design and EnVVeno Medical

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

Diversification Opportunities for Cadence Design and EnVVeno Medical

0.3

Correlation Coefficient

Cadence Design  EnVVeno Medical

Weak diversification

The 3 months correlation between Cadence and EnVVeno is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and enVVeno Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enVVeno Medical Corp 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 EnVVeno Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enVVeno Medical Corp has no effect on the direction of Cadence Design i.e., Cadence Design and EnVVeno Medical go up and down completely randomly.

Pair Corralation between Cadence Design and EnVVeno Medical

Given the investment horizon of 90 days Cadence Design Systems is expected to under-perform the EnVVeno Medical. But the stock apears to be less risky and, when comparing its historical volatility, Cadence Design Systems is 1.53 times less risky than EnVVeno Medical. The stock trades about -0.09 of its potential returns per unit of risk. The enVVeno Medical Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  303.00  in enVVeno Medical Corp on December 29, 2024 and sell it today you would lose (28.00) from holding enVVeno Medical Corp or give up 9.24% 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.  enVVeno Medical Corp

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.

enVVeno Medical Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cadence Design and EnVVeno Medical

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

The idea behind Cadence Design Systems and enVVeno Medical Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.