Correlation Between Cadence Design and Aries I

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

Diversification Opportunities for Cadence Design and Aries I

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Cadence and Aries is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Aries I Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aries I Acquisition 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 Aries I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aries I Acquisition has no effect on the direction of Cadence Design i.e., Cadence Design and Aries I go up and down completely randomly.

Pair Corralation between Cadence Design and Aries I

If you would invest  29,433  in Cadence Design Systems on September 17, 2024 and sell it today you would earn a total of  1,916  from holding Cadence Design Systems or generate 6.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy4.76%
ValuesDaily Returns

Cadence Design Systems  vs.  Aries I Acquisition

 Performance 
       Timeline  
Cadence Design Systems 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Design Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cadence Design unveiled solid returns over the last few months and may actually be approaching a breakup point.
Aries I Acquisition 

Risk-Adjusted Performance

0 of 100

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

Cadence Design and Aries I Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cadence Design and Aries I

The main advantage of trading using opposite Cadence Design and Aries I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Aries I 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 Aries I will offset losses from the drop in Aries I's long position.
The idea behind Cadence Design Systems and Aries I 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.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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