Correlation Between Cisco Systems and IShares MSCI

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

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

Diversification Opportunities for Cisco Systems and IShares MSCI

-0.63

Correlation Coefficient

Cisco Systems  IShares MSCI

Excellent diversification

The 3 months correlation between Cisco and IShares is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and iShares MSCI Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Thailand 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Thailand has no effect on the direction of Cisco Systems i.e., Cisco Systems and IShares MSCI go up and down completely randomly.

Pair Corralation between Cisco Systems and IShares MSCI

Given the investment horizon of 90 days Cisco Systems is expected to under-perform the IShares MSCI. In addition to that, Cisco Systems is 1.03 times more volatile than iShares MSCI Thailand. It trades about -0.03 of its total potential returns per unit of risk. iShares MSCI Thailand is currently generating about 0.13 per unit of volatility. If you would invest  6,262  in iShares MSCI Thailand on September 14, 2024 and sell it today you would earn a total of  139.00  from holding iShares MSCI Thailand or generate 2.22% 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.  iShares MSCI Thailand

Cisco Systems

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

iShares MSCI Thailand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Thailand has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cisco Systems and IShares MSCI

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

The idea behind Cisco Systems and iShares MSCI Thailand 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.