Correlation Between Cisco Systems and PROCTER

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

By analyzing existing cross correlation between Cisco Systems and PROCTER GAMBLE 555, you can compare the effects of market volatilities on Cisco Systems and PROCTER 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 PROCTER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and PROCTER.

Diversification Opportunities for Cisco Systems and PROCTER

-0.28

Correlation Coefficient

Cisco Systems  PROCTER

Very good diversification

The 3 months correlation between Cisco and PROCTER is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and PROCTER GAMBLE 555 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROCTER GAMBLE 555 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 PROCTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROCTER GAMBLE 555 has no effect on the direction of Cisco Systems i.e., Cisco Systems and PROCTER go up and down completely randomly.

Pair Corralation between Cisco Systems and PROCTER

If you would invest  5,881  in Cisco Systems on November 28, 2024 and sell it today you would earn a total of  528.00  from holding Cisco Systems or generate 8.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.05%
Values	Daily Returns

Cisco Systems  vs.  PROCTER GAMBLE 555

Cisco Systems

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 11 (%) 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 March 2025.

PROCTER GAMBLE 555

Risk-Adjusted Performance

Very Weak

Over the last 90 days PROCTER GAMBLE 555 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PROCTER 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 PROCTER

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

The idea behind Cisco Systems and PROCTER GAMBLE 555 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.