Correlation Between Cisco Systems and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and ProShares Ultra 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 ProShares Ultra 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 VIX, you can compare the effects of market volatilities on Cisco Systems and ProShares Ultra 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 ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and ProShares Ultra.
Diversification Opportunities for Cisco Systems and ProShares Ultra
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cisco and ProShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and ProShares Ultra VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra VIX 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 ProShares Ultra. 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 VIX has no effect on the direction of Cisco Systems i.e., Cisco Systems and ProShares Ultra go up and down completely randomly.
Pair Corralation between Cisco Systems and ProShares Ultra
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.19 times more return on investment than ProShares Ultra. However, Cisco Systems is 5.15 times less risky than ProShares Ultra. It trades about 0.25 of its potential returns per unit of risk. ProShares Ultra VIX is currently generating about -0.06 per unit of risk. If you would invest 5,064 in Cisco Systems on September 15, 2024 and sell it today you would earn a total of 821.00 from holding Cisco Systems or generate 16.21% 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. ProShares Ultra VIX
Performance |
Timeline |
Cisco Systems |
ProShares Ultra VIX |
Cisco Systems and ProShares Ultra Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cisco Systems and ProShares Ultra
The main advantage of trading using opposite Cisco Systems and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, ProShares Ultra 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 ProShares Ultra will offset losses from the drop in ProShares Ultra's long position.Cisco Systems vs. Passage Bio | Cisco Systems vs. Black Diamond Therapeutics | Cisco Systems vs. Alector | Cisco Systems vs. Century Therapeutics |
ProShares Ultra vs. ProShares UltraPro Short | ProShares Ultra vs. ProShares Short VIX | ProShares Ultra vs. iPath Series B | ProShares Ultra vs. ProShares UltraPro QQQ |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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