Correlation Between Cisco Systems and Mainstay International

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

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

Diversification Opportunities for Cisco Systems and Mainstay International

-0.36

Correlation Coefficient

Cisco Systems  Mainstay International

Very good diversification

The 3 months correlation between Cisco and Mainstay is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Mainstay International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay International 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 Mainstay International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay International has no effect on the direction of Cisco Systems i.e., Cisco Systems and Mainstay International go up and down completely randomly.

Pair Corralation between Cisco Systems and Mainstay International

Given the investment horizon of 90 days Cisco Systems is expected to generate 1.38 times more return on investment than Mainstay International. However, Cisco Systems is 1.38 times more volatile than Mainstay International Equity. It trades about 0.06 of its potential returns per unit of risk. Mainstay International Equity is currently generating about 0.0 per unit of risk. If you would invest  4,371  in Cisco Systems on October 10, 2024 and sell it today you would earn a total of  1,522  from holding Cisco Systems or generate 34.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.86%
Values	Daily Returns

Cisco Systems  vs.  Mainstay International Equity

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.

Mainstay International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mainstay International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Mainstay International 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 Mainstay International

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

The idea behind Cisco Systems and Mainstay International Equity 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.