Correlation Between Paysafe and Cadence Design

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

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

Diversification Opportunities for Paysafe and Cadence Design

-0.51

Correlation Coefficient

Paysafe  Cadence Design

Excellent diversification

The 3 months correlation between Paysafe and Cadence is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe 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 Paysafe 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 Paysafe 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 Paysafe i.e., Paysafe and Cadence Design go up and down completely randomly.

Pair Corralation between Paysafe and Cadence Design

Given the investment horizon of 90 days Paysafe is expected to under-perform the Cadence Design. In addition to that, Paysafe is 1.32 times more volatile than Cadence Design Systems. It trades about -0.02 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  25,905  in Cadence Design Systems on October 26, 2024 and sell it today you would earn a total of  6,547  from holding Cadence Design Systems or generate 25.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Paysafe  vs.  Cadence Design Systems

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cadence Design Systems

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Design Systems are ranked lower than 14 (%) 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.

Pair Trading with Paysafe and Cadence Design

The main advantage of trading using opposite Paysafe and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paysafe 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 Paysafe 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 Global Correlations module to find global opportunities by holding instruments from different markets.