Correlation Between Cisco Systems and Gamco Global

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

By analyzing existing cross correlation between Cisco Systems and Gamco Global Growth, you can compare the effects of market volatilities on Cisco Systems and Gamco Global 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 Gamco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Gamco Global.

Diversification Opportunities for Cisco Systems and Gamco Global

0.42

Correlation Coefficient

Cisco Systems  Gamco Global

Very weak diversification

The 3 months correlation between Cisco and Gamco is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Gamco Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Global Growth 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 Gamco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco Global Growth has no effect on the direction of Cisco Systems i.e., Cisco Systems and Gamco Global go up and down completely randomly.

Pair Corralation between Cisco Systems and Gamco Global

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.9 times more return on investment than Gamco Global. However, Cisco Systems is 1.12 times less risky than Gamco Global. It trades about 0.05 of its potential returns per unit of risk. Gamco Global Growth is currently generating about -0.08 per unit of risk. If you would invest  5,858  in Cisco Systems on December 21, 2024 and sell it today you would earn a total of  172.00  from holding Cisco Systems or generate 2.94% return on investment over 90 days.

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

Cisco Systems  vs.  Gamco Global Growth

Cisco Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Gamco Global Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gamco Global Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Gamco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cisco Systems and Gamco Global

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

The idea behind Cisco Systems and Gamco Global Growth 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.