Correlation Between Mamas Creations and Cadence Design

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

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

Diversification Opportunities for Mamas Creations and Cadence Design

0.9

Correlation Coefficient

Mamas Creations  Cadence Design

Almost no diversification

The 3 months correlation between Mamas and Cadence is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mamas Creations 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 Mamas Creations 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 Mamas Creations 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 Mamas Creations i.e., Mamas Creations and Cadence Design go up and down completely randomly.

Pair Corralation between Mamas Creations and Cadence Design

Given the investment horizon of 90 days Mamas Creations is expected to under-perform the Cadence Design. In addition to that, Mamas Creations is 1.48 times more volatile than Cadence Design Systems. It trades about -0.08 of its total potential returns per unit of risk. Cadence Design Systems is currently generating about -0.09 per unit of volatility. If you would invest  30,186  in Cadence Design Systems on December 28, 2024 and sell it today you would lose (4,517) from holding Cadence Design Systems or give up 14.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Mamas Creations  vs.  Cadence Design Systems

Mamas Creations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mamas Creations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 weak 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.

Pair Trading with Mamas Creations and Cadence Design

The main advantage of trading using opposite Mamas Creations and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mamas Creations 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 Mamas Creations 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.