Correlation Between Cadence Design and ATN International

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

Diversification Opportunities for Cadence Design and ATN International

-0.88

Correlation Coefficient

Cadence Design  ATN International

Pay attention - limited upside

The 3 months correlation between Cadence and ATN is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and ATN International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATN 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 ATN International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATN International has no effect on the direction of Cadence Design i.e., Cadence Design and ATN International go up and down completely randomly.

Pair Corralation between Cadence Design and ATN International

Given the investment horizon of 90 days Cadence Design Systems is expected to generate 0.55 times more return on investment than ATN International. However, Cadence Design Systems is 1.81 times less risky than ATN International. It trades about 0.07 of its potential returns per unit of risk. ATN International is currently generating about -0.04 per unit of risk. If you would invest  15,964  in Cadence Design Systems on September 23, 2024 and sell it today you would earn a total of  14,183  from holding Cadence Design Systems or generate 88.84% return on investment over 90 days.

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

Cadence Design Systems  vs.  ATN International

Cadence Design Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Design Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Cadence Design may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ATN International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATN International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Cadence Design and ATN International

The main advantage of trading using opposite Cadence Design and ATN International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadence Design position performs unexpectedly, ATN 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 ATN International will offset losses from the drop in ATN International's long position.

The idea behind Cadence Design Systems and ATN International 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.