Correlation Between Cadence Design and Bentley SystemsInc
Can any of the company-specific risk be diversified away by investing in both Cadence Design and Bentley SystemsInc 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 Cadence Design and Bentley SystemsInc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadence Design Systems and Bentley SystemsInc, you can compare the effects of market volatilities on Cadence Design and Bentley SystemsInc 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 Cadence Design with a short position of Bentley SystemsInc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Bentley SystemsInc.
Diversification Opportunities for Cadence Design and Bentley SystemsInc
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cadence and Bentley is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Bentley SystemsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bentley SystemsInc and Cadence Design 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 Cadence Design Systems are associated (or correlated) with Bentley SystemsInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bentley SystemsInc has no effect on the direction of Cadence Design i.e., Cadence Design and Bentley SystemsInc go up and down completely randomly.
Pair Corralation between Cadence Design and Bentley SystemsInc
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 0.82 times more return on investment than Bentley SystemsInc. However, Cadence Design Systems is 1.21 times less risky than Bentley SystemsInc. It trades about 0.1 of its potential returns per unit of risk. Bentley SystemsInc is currently generating about 0.04 per unit of risk. If you would invest 13,718 in Cadence Design Systems on December 30, 2023 and sell it today you would earn a total of 17,410 from holding Cadence Design Systems or generate 126.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cadence Design Systems vs. Bentley SystemsInc
Performance |
Timeline |
Cadence Design Systems |
Bentley SystemsInc |
Cadence Design and Bentley SystemsInc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cadence Design and Bentley SystemsInc
The main advantage of trading using opposite Cadence Design and Bentley SystemsInc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Bentley SystemsInc 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 Bentley SystemsInc will offset losses from the drop in Bentley SystemsInc's long position.Cadence Design vs. Genworth Financial | Cadence Design vs. Home Depot | Cadence Design vs. Ufp Industries | Cadence Design vs. HP Inc |
Bentley SystemsInc vs. Genworth Financial | Bentley SystemsInc vs. Home Depot | Bentley SystemsInc vs. Ufp Industries | Bentley SystemsInc vs. HP Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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