Correlation Between Applied Materials and Cadence Design
Can any of the company-specific risk be diversified away by investing in both Applied Materials 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 Applied Materials and Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and Cadence Design Systems, you can compare the effects of market volatilities on Applied Materials 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 Applied Materials with a short position of Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and Cadence Design.
Diversification Opportunities for Applied Materials and Cadence Design
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and Cadence is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials 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 Applied Materials 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 Applied Materials 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 Applied Materials i.e., Applied Materials and Cadence Design go up and down completely randomly.
Pair Corralation between Applied Materials and Cadence Design
Given the investment horizon of 90 days Applied Materials is expected to generate 1.27 times more return on investment than Cadence Design. However, Applied Materials is 1.27 times more volatile than Cadence Design Systems. It trades about 0.11 of its potential returns per unit of risk. Cadence Design Systems is currently generating about 0.02 per unit of risk. If you would invest 18,661 in Applied Materials on July 22, 2025 and sell it today you would earn a total of 3,838 from holding Applied Materials or generate 20.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. Cadence Design Systems
Performance |
| Timeline |
| Applied Materials |
| Cadence Design Systems |
Applied Materials and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and Cadence Design
The main advantage of trading using opposite Applied Materials and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials 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.| Applied Materials vs. Lam Research Corp | Applied Materials vs. Qualcomm Incorporated | Applied Materials vs. Texas Instruments Incorporated | Applied Materials vs. Arm Holdings plc |
| Cadence Design vs. MicroStrategy Incorporated | Cadence Design vs. Synopsys | Cadence Design vs. Snowflake | Cadence Design vs. Autodesk |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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