Correlation Between Cisco Systems and UST Inc
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and UST Inc 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 UST Inc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and ProShares Ultra 7 10, you can compare the effects of market volatilities on Cisco Systems and UST Inc 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 UST Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and UST Inc.
Diversification Opportunities for Cisco Systems and UST Inc
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cisco and UST is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and ProShares Ultra 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra 7 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 UST Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra 7 has no effect on the direction of Cisco Systems i.e., Cisco Systems and UST Inc go up and down completely randomly.
Pair Corralation between Cisco Systems and UST Inc
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.34 times more return on investment than UST Inc. However, Cisco Systems is 1.34 times more volatile than ProShares Ultra 7 10. It trades about 0.2 of its potential returns per unit of risk. ProShares Ultra 7 10 is currently generating about 0.17 per unit of risk. If you would invest 5,870 in Cisco Systems on December 2, 2024 and sell it today you would earn a total of 541.00 from holding Cisco Systems or generate 9.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cisco Systems vs. ProShares Ultra 7 10
Performance |
Timeline |
Cisco Systems |
ProShares Ultra 7 |
Cisco Systems and UST Inc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cisco Systems and UST Inc
The main advantage of trading using opposite Cisco Systems and UST Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, UST Inc 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 UST Inc will offset losses from the drop in UST Inc's long position.Cisco Systems vs. Mynaric AG ADR | Cisco Systems vs. KVH Industries | Cisco Systems vs. Telesat Corp | Cisco Systems vs. Digi International |
UST Inc vs. ProShares Ultra 20 | UST Inc vs. Universal | UST Inc vs. Direxion Daily 7 10 | UST Inc vs. ProShares UltraShort 7 10 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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