Correlation Between Acumen Pharmaceuticals and Cadence Design
Can any of the company-specific risk be diversified away by investing in both Acumen Pharmaceuticals 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 Acumen Pharmaceuticals and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acumen Pharmaceuticals and Cadence Design Systems, you can compare the effects of market volatilities on Acumen Pharmaceuticals 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 Acumen Pharmaceuticals with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acumen Pharmaceuticals and Cadence Design.
Diversification Opportunities for Acumen Pharmaceuticals and Cadence Design
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Acumen and Cadence is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Acumen Pharmaceuticals 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 Acumen Pharmaceuticals 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 Acumen Pharmaceuticals 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 Acumen Pharmaceuticals i.e., Acumen Pharmaceuticals and Cadence Design go up and down completely randomly.
Pair Corralation between Acumen Pharmaceuticals and Cadence Design
Given the investment horizon of 90 days Acumen Pharmaceuticals is expected to under-perform the Cadence Design. In addition to that, Acumen Pharmaceuticals is 2.39 times more volatile than Cadence Design Systems. It trades about -0.13 of its total potential returns per unit of risk. Cadence Design Systems is currently generating about -0.19 per unit of volatility. If you would invest 31,731 in Cadence Design Systems on February 3, 2024 and sell it today you would lose (4,087) from holding Cadence Design Systems or give up 12.88% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Acumen Pharmaceuticals vs. Cadence Design Systems
Performance |
Timeline |
Acumen Pharmaceuticals |
Cadence Design Systems |
Acumen Pharmaceuticals and Cadence Design Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Acumen Pharmaceuticals and Cadence Design
The main advantage of trading using opposite Acumen Pharmaceuticals and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acumen Pharmaceuticals 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.Acumen Pharmaceuticals vs. Pulmatrix | Acumen Pharmaceuticals vs. Adial Pharmaceuticals | Acumen Pharmaceuticals vs. Jaguar Animal Health | Acumen Pharmaceuticals vs. Acasti Pharma |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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