Correlation Between Sable Offshore and Cadence Design

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Can any of the company-specific risk be diversified away by investing in both Sable Offshore 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 Sable Offshore and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sable Offshore Corp and Cadence Design Systems, you can compare the effects of market volatilities on Sable Offshore 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 Sable Offshore with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and Cadence Design.

Diversification Opportunities for Sable Offshore and Cadence Design

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Sable and Cadence is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp 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 Sable Offshore 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 Sable Offshore Corp 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 Sable Offshore i.e., Sable Offshore and Cadence Design go up and down completely randomly.

Pair Corralation between Sable Offshore and Cadence Design

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 1.64 times more return on investment than Cadence Design. However, Sable Offshore is 1.64 times more volatile than Cadence Design Systems. It trades about 0.07 of its potential returns per unit of risk. Cadence Design Systems is currently generating about 0.07 per unit of risk. If you would invest  1,010  in Sable Offshore Corp on October 3, 2024 and sell it today you would earn a total of  1,280  from holding Sable Offshore Corp or generate 126.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy94.55%
ValuesDaily Returns

Sable Offshore Corp  vs.  Cadence Design Systems

 Performance 
       Timeline  
Sable Offshore Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sable Offshore is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
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 unfluctuating basic indicators, Cadence Design unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sable Offshore and Cadence Design Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sable Offshore and Cadence Design

The main advantage of trading using opposite Sable Offshore and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore 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 Sable Offshore Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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