Correlation Between Teleflex Incorporated and Cadence Design

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

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

Diversification Opportunities for Teleflex Incorporated and Cadence Design

0.81

Correlation Coefficient

Teleflex Incorporated  Cadence Design

Very poor diversification

The 3 months correlation between Teleflex and Cadence is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated i.e., Teleflex Incorporated and Cadence Design go up and down completely randomly.

Pair Corralation between Teleflex Incorporated and Cadence Design

Considering the 90-day investment horizon Teleflex Incorporated is expected to under-perform the Cadence Design. But the stock apears to be less risky and, when comparing its historical volatility, Teleflex Incorporated is 1.0 times less risky than Cadence Design. The stock trades about -0.01 of its potential returns per unit of risk. The Cadence Design Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  24,856  in Cadence Design Systems on December 29, 2024 and sell it today you would earn a total of  813.00  from holding Cadence Design Systems or generate 3.27% return on investment over 90 days.

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

Teleflex Incorporated  vs.  Cadence Design Systems

Teleflex Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teleflex Incorporated 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 fairly 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 conflicting 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 Teleflex Incorporated and Cadence Design

The main advantage of trading using opposite Teleflex Incorporated and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teleflex Incorporated 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 Teleflex Incorporated 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.