Correlation Between Cadence Design and Vaxxinity

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Can any of the company-specific risk be diversified away by investing in both Cadence Design and Vaxxinity 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 Vaxxinity 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 Vaxxinity, you can compare the effects of market volatilities on Cadence Design and Vaxxinity 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 Vaxxinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Vaxxinity.

Diversification Opportunities for Cadence Design and Vaxxinity

  Correlation Coefficient

Very good diversification

The 3 months correlation between Cadence and Vaxxinity is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Vaxxinity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaxxinity 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 Vaxxinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaxxinity has no effect on the direction of Cadence Design i.e., Cadence Design and Vaxxinity go up and down completely randomly.

Pair Corralation between Cadence Design and Vaxxinity

Given the investment horizon of 90 days Cadence Design is expected to generate 2.17 times less return on investment than Vaxxinity. But when comparing it to its historical volatility, Cadence Design Systems is 2.2 times less risky than Vaxxinity. It trades about 0.19 of its potential returns per unit of risk. Vaxxinity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  67.00  in Vaxxinity on December 3, 2023 and sell it today you would earn a total of  12.00  from holding Vaxxinity or generate 17.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
ValuesDaily Returns

Cadence Design Systems  vs.  Vaxxinity

Cadence Design Systems 

Risk-Adjusted Performance

13 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Design Systems are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Cadence Design unveiled solid returns over the last few months and may actually be approaching a breakup point.

Risk-Adjusted Performance

1 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Vaxxinity are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vaxxinity may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Cadence Design and Vaxxinity Volatility Contrast

   Predicted Return Density   

Pair Trading with Cadence Design and Vaxxinity

The main advantage of trading using opposite Cadence Design and Vaxxinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, Vaxxinity 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 Vaxxinity will offset losses from the drop in Vaxxinity's long position.
The idea behind Cadence Design Systems and Vaxxinity 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.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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