Correlation Between Cadence Design and APPLE

Can any of the company-specific risk be diversified away by investing in both Cadence Design and APPLE 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 APPLE 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 APPLE INC 3, you can compare the effects of market volatilities on Cadence Design and APPLE 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 APPLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and APPLE.

Diversification Opportunities for Cadence Design and APPLE

-0.23

Correlation Coefficient

Cadence Design  APPLE

Very good diversification

The 3 months correlation between Cadence and APPLE is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and APPLE INC 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE INC 3 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 APPLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLE INC 3 has no effect on the direction of Cadence Design i.e., Cadence Design and APPLE go up and down completely randomly.

Pair Corralation between Cadence Design and APPLE

Given the investment horizon of 90 days Cadence Design Systems is expected to under-perform the APPLE. In addition to that, Cadence Design is 9.06 times more volatile than APPLE INC 3. It trades about -0.09 of its total potential returns per unit of risk. APPLE INC 3 is currently generating about -0.06 per unit of volatility. If you would invest  9,654  in APPLE INC 3 on December 29, 2024 and sell it today you would lose (94.00) from holding APPLE INC 3 or give up 0.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Cadence Design Systems  vs.  APPLE INC 3

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.

APPLE INC 3

Risk-Adjusted Performance

Very Weak

Over the last 90 days APPLE INC 3 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APPLE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cadence Design and APPLE

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

The idea behind Cadence Design Systems and APPLE INC 3 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.