Correlation Between Sable Offshore and Cadence Design
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 94.55% |
Values | Daily Returns |
Sable Offshore Corp vs. Cadence Design Systems
Performance |
Timeline |
Sable Offshore Corp |
Cadence Design Systems |
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.Sable Offshore vs. Helmerich and Payne | Sable Offshore vs. Noble plc | Sable Offshore vs. Nabors Industries | Sable Offshore vs. Precision Drilling |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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