Correlation Between Cisco Systems and Oaktree (lux)

Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Oaktree (lux) 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 Cisco Systems and Oaktree (lux) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cisco Systems and Oaktree Iii , you can compare the effects of market volatilities on Cisco Systems and Oaktree (lux) 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 Cisco Systems with a short position of Oaktree (lux). Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Oaktree (lux).

Diversification Opportunities for Cisco Systems and Oaktree (lux)

0.8

Correlation Coefficient

Cisco Systems  Oaktree (lux)

Very poor diversification

The 3 months correlation between Cisco and Oaktree is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Oaktree Iii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree (lux) and Cisco Systems 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 Cisco Systems are associated (or correlated) with Oaktree (lux). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree (lux) has no effect on the direction of Cisco Systems i.e., Cisco Systems and Oaktree (lux) go up and down completely randomly.

Pair Corralation between Cisco Systems and Oaktree (lux)

Given the investment horizon of 90 days Cisco Systems is expected to generate 14.39 times more return on investment than Oaktree (lux). However, Cisco Systems is 14.39 times more volatile than Oaktree Iii . It trades about 0.19 of its potential returns per unit of risk. Oaktree Iii is currently generating about 0.38 per unit of risk. If you would invest  5,237  in Cisco Systems on October 8, 2024 and sell it today you would earn a total of  640.00  from holding Cisco Systems or generate 12.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Cisco Systems  vs.  Oaktree Iii

Cisco Systems

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Cisco Systems may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Oaktree (lux)

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Oaktree Iii are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Oaktree (lux) is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cisco Systems and Oaktree (lux)

The main advantage of trading using opposite Cisco Systems and Oaktree (lux) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Oaktree (lux) 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 Oaktree (lux) will offset losses from the drop in Oaktree (lux)'s long position.

The idea behind Cisco Systems and Oaktree Iii 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.