Correlation Between Canlan Ice and Cadence Design

Can any of the company-specific risk be diversified away by investing in both Canlan Ice and Cadence Design 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 Canlan Ice and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canlan Ice Sports and Cadence Design Systems, you can compare the effects of market volatilities on Canlan Ice and Cadence Design 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 Canlan Ice with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Cadence Design.

Diversification Opportunities for Canlan Ice and Cadence Design

0.13

Correlation Coefficient

Canlan Ice  Cadence Design

Average diversification

The 3 months correlation between Canlan and Cadence is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of Canlan Ice i.e., Canlan Ice and Cadence Design go up and down completely randomly.

Pair Corralation between Canlan Ice and Cadence Design

Assuming the 90 days horizon Canlan Ice Sports is expected to generate 0.17 times more return on investment than Cadence Design. However, Canlan Ice Sports is 6.05 times less risky than Cadence Design. It trades about 0.23 of its potential returns per unit of risk. Cadence Design Systems is currently generating about -0.01 per unit of risk. If you would invest  294.00  in Canlan Ice Sports on October 9, 2024 and sell it today you would earn a total of  3.00  from holding Canlan Ice Sports or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Canlan Ice Sports  vs.  Cadence Design Systems

Canlan Ice Sports

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 weak basic indicators, Cadence Design may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Canlan Ice and Cadence Design

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

The idea behind Canlan Ice Sports and Cadence Design Systems 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.