Correlation Between Cisco Systems and The Us

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

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

Diversification Opportunities for Cisco Systems and The Us

-0.69

Correlation Coefficient

Cisco Systems  The Us

Excellent diversification

The 3 months correlation between Cisco and The is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and The Government Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Fixed 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 The Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Fixed has no effect on the direction of Cisco Systems i.e., Cisco Systems and The Us go up and down completely randomly.

Pair Corralation between Cisco Systems and The Us

Given the investment horizon of 90 days Cisco Systems is expected to generate 3.8 times more return on investment than The Us. However, Cisco Systems is 3.8 times more volatile than The Government Fixed. It trades about 0.05 of its potential returns per unit of risk. The Government Fixed is currently generating about -0.75 per unit of risk. If you would invest  5,855  in Cisco Systems on October 9, 2024 and sell it today you would earn a total of  38.00  from holding Cisco Systems or generate 0.65% return on investment over 90 days.

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

Cisco Systems  vs.  The Government Fixed

Cisco Systems

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 13 (%) 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.

Government Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Government Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, The Us 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 The Us

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

The idea behind Cisco Systems and The Government Fixed 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.