Correlation Between Cisco Systems and 04686JAE1

Can any of the company-specific risk be diversified away by investing in both Cisco Systems and 04686JAE1 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 04686JAE1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cisco Systems and ATH 345 15 MAY 52, you can compare the effects of market volatilities on Cisco Systems and 04686JAE1 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 04686JAE1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and 04686JAE1.

Diversification Opportunities for Cisco Systems and 04686JAE1

0.07

Correlation Coefficient

Cisco Systems  04686JAE1

Significant diversification

The 3 months correlation between Cisco and 04686JAE1 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and ATH 345 15 MAY 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATH 345 15 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 04686JAE1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATH 345 15 has no effect on the direction of Cisco Systems i.e., Cisco Systems and 04686JAE1 go up and down completely randomly.

Pair Corralation between Cisco Systems and 04686JAE1

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.5 times more return on investment than 04686JAE1. However, Cisco Systems is 1.98 times less risky than 04686JAE1. It trades about -0.06 of its potential returns per unit of risk. ATH 345 15 MAY 52 is currently generating about -0.09 per unit of risk. If you would invest  5,948  in Cisco Systems on October 7, 2024 and sell it today you would lose (62.00) from holding Cisco Systems or give up 1.04% of portfolio value over 90 days.

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

Cisco Systems  vs.  ATH 345 15 MAY 52

Cisco Systems

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Cisco Systems may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ATH 345 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATH 345 15 MAY 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 04686JAE1 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cisco Systems and 04686JAE1

The main advantage of trading using opposite Cisco Systems and 04686JAE1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, 04686JAE1 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 04686JAE1 will offset losses from the drop in 04686JAE1's long position.

The idea behind Cisco Systems and ATH 345 15 MAY 52 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.