Correlation Between Cisco Systems and Pacer Lunt

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

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

Diversification Opportunities for Cisco Systems and Pacer Lunt

-0.27

Correlation Coefficient

Cisco Systems  Pacer Lunt

Very good diversification

The 3 months correlation between Cisco and Pacer is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Pacer Lunt MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt MidCap 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 Pacer Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt MidCap has no effect on the direction of Cisco Systems i.e., Cisco Systems and Pacer Lunt go up and down completely randomly.

Pair Corralation between Cisco Systems and Pacer Lunt

Given the investment horizon of 90 days Cisco Systems is expected to generate 1.07 times more return on investment than Pacer Lunt. However, Cisco Systems is 1.07 times more volatile than Pacer Lunt MidCap. It trades about 0.08 of its potential returns per unit of risk. Pacer Lunt MidCap is currently generating about -0.11 per unit of risk. If you would invest  5,724  in Cisco Systems on December 19, 2024 and sell it today you would earn a total of  306.00  from holding Cisco Systems or generate 5.35% return on investment over 90 days.

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

Cisco Systems  vs.  Pacer Lunt MidCap

Cisco Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 6 (%) 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.

Pacer Lunt MidCap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Lunt MidCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Cisco Systems and Pacer Lunt

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

The idea behind Cisco Systems and Pacer Lunt MidCap 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.