Correlation Between Cadence Design and CACI International
Can any of the company-specific risk be diversified away by investing in both Cadence Design and CACI International 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 CACI International 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 CACI International, you can compare the effects of market volatilities on Cadence Design and CACI International 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 CACI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and CACI International.
Diversification Opportunities for Cadence Design and CACI International
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cadence and CACI is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and CACI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CACI International 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 CACI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CACI International has no effect on the direction of Cadence Design i.e., Cadence Design and CACI International go up and down completely randomly.
Pair Corralation between Cadence Design and CACI International
Given the investment horizon of 90 days Cadence Design Systems is expected to generate 2.01 times more return on investment than CACI International. However, Cadence Design is 2.01 times more volatile than CACI International. It trades about 0.08 of its potential returns per unit of risk. CACI International is currently generating about -0.01 per unit of risk. If you would invest 29,030 in Cadence Design Systems on January 17, 2024 and sell it today you would earn a total of 1,555 from holding Cadence Design Systems or generate 5.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 97.56% |
Values | Daily Returns |
Cadence Design Systems vs. CACI International
Performance |
Timeline |
Cadence Design Systems |
CACI International |
Cadence Design and CACI International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cadence Design and CACI International
The main advantage of trading using opposite Cadence Design and CACI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, CACI International 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 CACI International will offset losses from the drop in CACI International's long position.Cadence Design vs. C3 Ai Inc | Cadence Design vs. Shopify | Cadence Design vs. Snowflake | Cadence Design vs. ServiceNow |
CACI International vs. Globant SA | CACI International vs. Concentrix | CACI International vs. CDW Corp | CACI International vs. BigBearai Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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